How debit and credit ACH can save you time and money

August 11, 2010

The banking industry has undergone monumental technological changes during the past ten years. One of the most exciting has been bringing electronic funds transfer (EFT) to nearly any business that can benefit from using it. Also called ACH, which stands for Automated Clearing House is a network that electronically processes collections and payments. Though there are a number of types of ACH transactions, ACH debit (also called direct debit) and ACH credit are the most common.

Through a state of the art interface, the Business Bank of Texas makes originating ACH debit and credit transactions safe, secure, and convenient.

ACH debit

ACH debit transactions are most often originated by bank customers for recurring payments from their customers. Using a safe and secure web interface a bank customer can originate a batch of withdrawals from its customers account, provided they have written permission to do so.

Good examples of ACH debit transactions are insurance payments, gym membership dues, and subscriptions for periodic services.

Benefits of using ACH Debit include:

  • Reduced cost of postage, personnel, and time sending out statements
  • Increased collection rate
  • Predictable collection rate
  • Ability to predict cash flow accurately

ACH credit

Just the opposite of ACH debits, ACH credit processing allows you to originate a payment from your account to one of your vendors or other parties. Using the same encrypted web interface you can originate payments to other parties through your system.

Examples include federal tax deposits, payments to vendors that you want to wait until a certain time of the month to pay them, and the most common type, payroll deposits.

ACH Credit benefits include:

  • Predictable timing of payments to vendors
  • Retaining your cash until the last possible day to pay and stay within vendor terms
  • One banking day processing of payments to vendors and employees
  • Cost and time savings similar to ACH debit

Both ACH debits and credits require you to have the other party’s bank routing and account numbers. Other than a minor amount of recordkeeping, handling ACH transactions is easy and fast. Training is easy and our bank provides you back-up support help when you have a question.

If you are a Texas business that wants to better manage your incoming and outgoing cash, our ACH service is for you. Give us a call and let us tell you more.

Topics: Operations, Management, Blog Posts, Accounting & Finance

Mary Ann Hebel

Business Bank of Texas

Mary Ann Hebel is organizer, director, executive vice president and chief financial officer of Business Bank of Texas, N.A. With over 37 years of banking experience, Mary Ann has contributed to the success of three national banks in the areas of accounting, data processing, human resources, and more recently as chief operations and chief financial officer. Mary Ann has also served as a consultant to the Texas Department of Banking in the capacity of liquidation agent for failed trust companies and private banks.
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