If you’ve experienced the “joy” of having teenagers matriculating through middle and high school, you’ve no doubt heard the question, “Why do I have to take Algebra?”
I know with each darling little one of mine, I tried to articulate the importance of problem solving, mastering methodology, applying logic to formulas, etc. But, I gotta admit, I’ve never encountered a need to solve a quadratic equation post algebra class, and I still went to college, got jobs, married and am enjoying an Algebra-free life. Of course I couldn’t tell my kids that. Better that they suffered through it like I did!
ACH payments, however, are not like Algebra. I can honestly say to you that businesses that want to get paid (I think that’s every business) really do need to know about how ACH payments work, including ACH payment features, requirements, rules, obligations and recourses. Not having a grasp of ACH basics can increase costs and risks unnecessarily.
As we here at NACHA-The Electronic Payments Association (the organization that governs ACH payments) travel to conferences and meet with businesses, it’s pretty clear that even seasoned financial professionals (accounts receivable/payable, treasury, accounting, credit, etc.) are at times at bit fuzzy on the ACH’s full range of features, functions, benefits and requirements for the Procure-to-Pay/consumer disbursement, Order-to-Cash/consumer collections and Hire-to-Retire processes.
Unlike Algebra, where we really don’t need to solve quadratic equations anymore, there are real risks to not knowing about ACH payments, such as:
- Decreasing cash flow visibility;
- Extending DSO (days sales outstanding);
- Exposing your bank account to unauthorized withdrawls;
- Paying higher fees and related labor costs for payment receipt and cash application;
- Remaining stuck in a remittance/non-confirming payments nightmare;
- Paying more for sending and receiving wire and international payments;
- Failing to recover funds in the event of a payables error;
- Losing funds owed to your business due to customer fraud;
- Wasting resources on customer service;
- Falling behind your competitors;
- Increasing liability for not following the NACHA Operating Rules.
Listen to the recording of our “ACH Payment Payables and Receivables Basics for Businesses,” Webinar to learn how to improve payment and receivables functions, and reduce risk via ACH payments.