ACH Transfer
An electronic bank-to-bank payment processed through the Automated Clearing House network, typically settling in one to two business days.
Definition
An ACH transfer moves money electronically between US bank accounts through the Automated Clearing House network, a batch-processing system governed by Nacha. Instead of a client mailing a check or paying by card, the funds travel directly from their bank account to yours. ACH covers both credits (the payer pushes money to you) and debits (you pull money from an account with the payer's authorization).
In practice, ACH payments are processed in batches several times a day rather than instantly. A standard ACH transfer settles in one to two business days, while Same Day ACH can land funds within hours for a small premium. Because ACH skips the card networks entirely, fees are dramatically lower than credit card processing—often a flat fee of less than a dollar or a small percentage capped at a few dollars.
Why It Matters
For anyone sending invoices, ACH is usually the cheapest way to get paid. On a $10,000 invoice, a 2.9% card fee costs you $290, while an ACH payment might cost $5 or less. Offering ACH as a payment option on larger invoices can save thousands of dollars a year without asking clients to do anything more complicated than entering their bank details once.
The trade-off is speed and finality. Funds take a day or two to settle, and an ACH debit can be returned for insufficient funds days after it appears to succeed. Build that timing into your cash flow expectations, and consider reserving ACH for trusted, repeat clients on big-ticket work.
Examples
- 1
A design agency adds ACH as a payment option on a $15,000 invoice, paying a $5 flat fee instead of roughly $435 in card processing fees.
- 2
A freelancer's client initiates an ACH transfer on Monday morning; the funds settle in the freelancer's account on Wednesday.
- 3
A consultant sets up recurring ACH debits for a $3,000 monthly retainer, so payment pulls automatically on the 1st of each month.
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