How to Accept ACH Payments

To accept ACH payments, first set up a verified business bank account that supports electronic transfers. Next, choose a reliable ACH payment processor or invoicing software that integrates with your accounting system and offers secure, traceable transactions. Obtain client authorization for each payment, clearly indicate ACH as a payment option on your invoices, and provide straightforward instructions for clients to complete the transfer. Finally, monitor, reconcile, and secure all transactions to ensure funds are received efficiently and safely, minimizing delays and errors in your payment process.

Understand ACH Payments

Before accepting ACH payments, you should know how they work:

• Definition: ACH is an electronic network for transferring funds between banks in the U.S.‍
• Types:
  
  • Direct Deposit: Payments sent to your bank account, often used for payroll.
  • Direct Payment: Clients send payments for invoices or bills directly to your account.
• Benefits:
  
  • Lower transaction fees than credit cards
  • Secure and traceable transfers
  • Faster payment processing than paper checks

Example: A contractor invoices a client for $2,500. Instead of waiting for a mailed check, the client pays via ACH, and funds arrive in 1–2 business days.

Set Up a Business Bank Account

ACH payments require a verified business bank account.

Steps to set up:

1. Open a business checking account if you don’t already have one.
2. Ensure the bank supports ACH transactions.
3. Collect your bank routing number and account number for ACH setup.

Example:

Choose an ACH Payment Processor

To accept ACH payments, you’ll typically need a payment processor or software that supports ACH transactions.

Popular options:

• DepositFix
• Stripe
• PayPal
• Square
• QuickBooks Payments

Factors to consider:

• Transaction fees (often lower than credit cards)
• Speed of settlement
• Integration with invoicing or accounting software
• Security and fraud protection

Example: A small landscaping business uses QuickBooks Payments to send invoices with ACH payment options. Clients can pay directly from their bank accounts, reducing processing costs.

Obtain Client Authorization

Legally, you must get authorization from clients before initiating ACH withdrawals.

Best practices:

• Use a signed ACH authorization form.
• Include: client name, bank account number, routing number, payment amount, and frequency (one-time or recurring).
• Keep records for compliance and audits.

Example: A contractor provides clients with a one-page ACH authorization form for recurring monthly services, ensuring all payments are approved in advance.

Send Invoices with ACH Payment Option

Make it easy for clients to pay by including ACH options directly on invoices.

Tips for invoicing:

• Clearly indicate that ACH payment is accepted.
• Include a “Pay via Bank Transfer” button if using online invoicing software.
• Provide clear instructions, including account details and any reference codes.

Example: An interior design firm sends invoices with a direct ACH link, allowing clients to pay $1,200 instantly without manually entering bank info.

Verify Payments and Reconcile Accounts

Once an ACH payment is submitted, verify that it has cleared and record it in your accounting system.

Steps:

• Check your bank account for the credited amount.
• Match payments to invoices in your accounting software.
• Track pending, failed, or returned transactions to resolve issues quickly.

Example:

Implement Security Measures

ACH payments are secure but still require proper precautions.

Security tips:

• Use secure, encrypted payment platforms.
• Limit access to banking credentials.
• Verify client information before processing transactions.
• Maintain records of authorization forms.

Example: A contractor stores all ACH authorizations in an encrypted cloud folder and requires dual approval for payments above $5,000.

Automate Recurring ACH Payments

For recurring services, automate ACH payments to ensure timely collection and reduce manual processing.

Benefits:

• Predictable cash flow
• Reduced late payments
• Less administrative effort

Example: A cleaning service sets up monthly $500 ACH withdrawals for clients with pre-approved authorization, saving hours on manual invoicing.

Handle Failed or Returned ACH Payments

Sometimes, ACH payments fail due to insufficient funds or incorrect account info.

Steps to manage failures:

• Notify the client immediately.
• Request updated bank details or resubmit payment.
• Keep track of failed transactions in your accounting system.

Example: