Over the last decade, ACH transactions volume grew significantly by over 50%. In fact, the same-day ACH transactions from 2019 to 2020 increased by 37%, or from 59.8 million transactions to 81.6 million, because it enabled businesses to operate more efficiently on greater payments.
The faster an ACH transaction is processed, the less time for that payment amount to change and potentially fall below a certain threshold. That means businesses can save money on fees and access cash faster for operational activities like payroll, inventory management, and invoicing customers.
Before, it can take up to three days for an ACH transaction to settle – but the new Same Day ACH updates will allow transactions done on business days before the close of banking hours at participating financial institutions (banks) to be completed within a single day. Learn more about the importance of faster ACH settlement below.
What is Same Day ACH Settlement?
The ACH network is a system that allows users to transfer funds between bank accounts. It is a way for users to move money from one account to another without using cash or a check.
The system allows banks and customers in the U.S. to send funds. It makes it possible for people in other countries, such as Mexico, Canada, and Europe, to efficiently make cross-border transactions when utilizing ACH transfers between banks.
There is no doubt that the digital age has changed how we do business. The ease of transferring money across state lines and even internationally makes it possible to get a product from halfway around the world within a week.
However, some inherent problems with this type of system can lead to issues for businesses. One such issue is slower ACH settlement times.
The New ACH rules now allow for same-day settlement of transactions. It means that the funds will be available to your bank account as soon as possible after you initiate an ACH withdrawal from the platform.
However, it is possible to get held until the next business day if there is not enough liquidity in your bank account on the initiation date.
Benefits of Faster ACH Settlement
There are three primary reasons why faster ACH settlements are important:
Increased Cash Flow
With faster ACH settlement times, you can get your money into and out of the system much more quickly. It means that cash flow has a higher chance of not being an issue for businesses than before with slower settlement times.
With increased speed in transactions, there is also the possibility to increase revenue by allowing your customers to pay for goods and services much more quickly. It gives your business the upper hand over competitors who do not offer same-day settlement on their ACH withdrawals, which means increased revenue in turn.
Better Customer Satisfaction
Faster ACH settlements mean fewer customers will become disgruntled with slow transaction times when they deposit or withdraw funds from your bank account.
Customers will appreciate the faster settlement times, and it can lead to a more positive relationship with your business, which is never a bad thing in any transaction situation.
Decreased Risk of Non-Sufficient Funds (NSF)
With faster ACH settlement times, there is a smaller chance of an NSF fee being charged to your bank account when someone purchases with deposited funds. The lower the risk of getting hit with an NSF charge for any given transaction, the better off your cash flow situation will be in general.
By facilitating same-day settlement times for our customers’ withdrawals, you create a more efficient platform that allows them to receive their funds within hours of withdrawal instead of days. The increase in cash flow enables them to process withdrawals more frequently, pay down debt faster and make daily business decisions with confidence that they can meet payroll deadlines without worrying about costly NSF fees.
As you can see, there are many reasons to make sure that your ACH settlement times are as quick and efficient as possible. If you want the funds in your bank account faster, then having an option for same-day settlement can be a real lifesaver when it comes to cash flow issues.
Make sure that you check with any business partners or clients before initiating an ACH withdrawal to ensure that they offer a same-day settlement. It can be the difference between having your money in hand or waiting another day to get it.
Faster ACH settlements are essential because they allow businesses to keep more cash flow on hand and quickly process transactions. It will enable companies to increase revenue opportunities while keeping their customers happy with quicker transaction times.
Technology has revolutionized every aspect of life that we know, like payments processing for businesses and personal use. Faster ACH settlements are vital because they enable business owners to process payments faster than ever before while also reducing costs associated with transferring funds.
Want to learn more about ACH payments for your e-commerce business? Book a time with me at: https://calendly.com/jayant-eproxim/linkedin.