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How to Make an ACH Payment

Illustration of how to make an ACH payment

ACH payments move money electronically from one bank account to another. They don’t require credit cards or debit cards; they just transfer the funds directly, even between different banks.

If you’ve ever received a paycheck by direct deposit, that was probably through the ACH system. Or, if you set up your mortgage or electric bill to be taken automatically out of your bank account every month, those were probably ACH payments too.

Why do so many businesses use the ACH system? For one thing, it’s easy and convenient.

It’s also safer than using paper checks, which can get lost, or worse, putting your name, address, and bank account info into the wrong hands and exposing you to check fraud.

And it’s much faster than sending a check—not just for your vendor, but for your own accounting.

How do ACH payments work?

ACH stands for Automatic Clearing House—which only matters because there are a lot of security measures in place that go into the “clearing” part. Even though they’re electronic payments, it usually takes 2–4 business days for the transfer to complete.

That said, one of the convenient things about making an ACH payment is that you see the funds go out immediately. Even if the company you’re paying can’t use the funds for a few days, you’ll know they’re on the way, and they’ll know they’ve been paid.

This also makes bank reconciliation a lot easier because you don’t have to deal with checks that have been mailed but not cashed. So you don’t have to worry about keeping enough money in your account to cover those checks—payments that might hit your account anywhere up to a month or more after you sent them.

And, because of the way the system is set up, ACH payments can be stopped or returned under certain circumstances, much like other methods of transferring funds. Plus, the Bill.com platform is set up to flag many potential issues before they happen, like trying to pay the same invoice twice by mistake.

What information is needed to make an ACH payment?

To make an ACH payment, the system needs enough basic information about you and about whoever you’re paying to make sure it has permission to transfer the funds, and also to make sure your funds are going to the right place.

If you’ve ever set up automatic bank payments for something like rent, mortgage, or a utility bill, you probably had to fill out and sign a form that asked you for your personal information, your bank account information, and probably an image of a voided check, along with your signature.

With Bill.com, our intelligent business payments platform is designed to make that process relatively easy. Once you set up your Bill.com account, you’re ready to make an ACH payment to any vendor that’s also in our network.

If you need to pay a new vendor, that’s easy too. Just invite them to join the Bill.com network. The system will walk them through the signup process, and then you can pay that vendor by ACH whenever you need to, whether you’re making a one-time transfer or setting up a recurring payment.

Types of ACH transfers

ACH payments can either be from you or to you. Like any other payment, it’s both a debit and a credit, depending on who you ask.

From your perspective, ACH debits are when you make payments to someone else.

ACH credits are when you accept payments from someone else.

When you’re reading about the ACH system, you might also see articles that talk about “pushing” funds or “pulling” funds. That doesn’t have anything to do with which way the money’s flowing. It has to do with who’s initiating the transfer.

For example, you might ask your bank to send your mortgage check to your mortgage holder automatically every month. In that case, you’re asking your bank to initiate those payments for you, and your bank is “pushing” the funds out.

But, if you set that mortgage payment up through the mortgage holder directly, giving them permission to take the money out of your account, then you’re asking the mortgage holder to initiate the payments (instead of your bank), and they’re “pulling” the funds in.

That’s all good information to have if you feel like talking about ACH payments with a banker, but none of it really matters if you’re in the Bill.com system.

On the Bill.com platform, making or receiving any ACH payment is very straightforward.

How do I send money through ACH?

If you want to send an ACH payment through Bill.com, you’ll need to start by setting up your own account. Once you’re in the system, sending an ACH is just a matter of capturing invoices in Bill.com, making sure the vendor you’re paying is in the system, confirming all the information is correct, and then paying it with a click.

Step 1. Enter the invoice

There are 3 easy ways to enter any invoice into the Bill.com system:

  • Have your vendor email it directly to your Bill.com dedicated email address,
  • Drag and drop it onto the invoice inbox,
  • Or snap a picture of it in the Bill.com mobile app

No matter how you add it, every invoice is stored in the same place, so you can find them whenever you need them.

Once the invoice is in the system, our Intelligent Virtual Assistant, IVA, reads the data from the invoice automatically and enters it for your review, saving you the time and hassle of typing it all in.

Step 2. Click on the vendor

Choose the invoice you want to pay, and click on the vendor. You’ll see whether that vendor is set up for ACH payments. If they aren’t, you can still pay them using any of their approved methods, or you can invite them to join the Bill.com network to take ACH payments.

If you invite them to the network, the vendor will receive an email asking them to fill out their own info for the Bill.com system. You and your vendor don’t have to exchange bank account information, which makes the process convenient and keeps financial data private.

Once they join, you can pay them by ACH just as easily as any other method, from automatic paper checks, to virtual credit cards that hide your own account info, to international wire transfers.

Step 3. Review & pay

The review process for that invoice will be unique to you. Bill.com lets you set up your own approval rules however you need to. So before you pay that bill, you’ll have to run it through your approval process, but our digital workflows make that quick and easy.

Approvers can even receive your approval request as a notification on their mobile device, significantly reducing the time spent waiting on approvals in most paper systems. Plus, the approval is automatically stored with the invoice, so you can go back and see those approval details if you ever need to.

Once the invoice is approved, you can pay it for one low, flat ACH fee by clicking the “Pay” button. You can learn more about ACH fees and plans on our pricing page.

Whether you’re sending a domestic ACH or an international wire transfer, the system will take care of it for you. We’ll even print and mail a paper check if that’s what the vendor needs.

Better yet, Bill.com syncs with most major accounting software platforms, so you won’t have to enter that payment twice. We’ll take care of it for you.

For businesses large and small

We work hard to make paying your bills easy for any business, from that neighborhood coffee shop to fully integrated enterprise solutions.

So, whether you’re a small business looking to pivot and grow or a midsize-to-large business with dozens, hundreds, or even thousands of vendors, visit our solutions pages to learn more about how Bill.com can save you time and money while making those ACH payments a breeze.

“We needed systems that were easy to implement and would serve as strong tools for our finance team. The Bill.com implementation was unbelievably simple. Unlike other enterprise software, you don’t need to hire outside people to implement it. You can start using it immediately. And combining it with NetSuite is seamless.” — Gary Hornbeek, VP Finance, Quicken

“We transitioned from a paper file system for payables to Bill.com four years ago and have never looked back. Switching to Bill.com has ensured we never lose an invoice again, never forget to pay, and have greater visibility into our payables - both in detail and in summary. It has made actually paying our bills a breeze, cutting down on time spent printing and mailing checks. Now all it takes is a few clicks of the mouse, and our vendors are paid in full and on time, and a perfect workflow to prove it. In this unprecedented period when we are all working remotely, Bill.com ensures we don't miss a beat.” — Katherine Harvey, CEO and Co-founder, Bare Bones Broth, 4/8/20

Try ACH payment processing now

 

April 10, 2020
Mark Gervase
Director, Product Marketing, Bill.com
Mark works with accountants and finance professionals to achieve efficiency and intelligence through automation. He is a former CPA with experience in public accounting and corporate finance and has a background in helping companies use financial technology. Mark holds an MBA and BA in Economics from the University of California Berkeley.