How does Direct ACH Transmission work?
Odds are you have probably heard of ACH, but not all ACH services are equal and there is a big distinction between direct and indirect. For accounting decision makers, the ability to pay vendors directly through direct ACH services is a competitive advantage for accounts payables. So, let's take a look at how direct ACH Transmission works…
ACH transmission is the primary method used for payroll direct deposit, but many businesses us it to pay their vendors as well. Let's talk about how this works. ACH stands for automated clearinghouse and it's a method of electronically transferring funds. With accounts payable management software, the software provider may offer ACH but often will work more like an intermediary clearinghouse--you transfer funds to them, they transfer payment to your vendor.
On the other hand, Direct ACH is just what it sounds like, paying vendors directly using an AP solution--you pay straight from your own bank account into a vendor's. With an AP management solution like Fidesic, an ACH file is generated as your invoices are approved and automatically sent to your bank directly over SFTP. The bank then processes the ACH as if the client manually uploaded it, and it is something that nearly all modern banks support. If you want to vendors by ACH, ask your back if it supports “Direct ACH Transmission.”
Why Direct ACH Transmission?
Cost effective - most banks only charge you a small fee per file. Each file can issue multiple (many) payments
Saves Time – Reduces manual processes and simplifies
Secure - Collect Vendor ACH (banking) info securely on Fidesic.
As a CFO or AP manager, you know that automation software is critical to improving accuracy and efficiency. Direct ACH transmission is an important part of that equation to simplify and reduce your headaches during period closings.
Learn more about accounts payable automation from Fidesic »
With Fidesic, send ACH and Paper Checks. Simply pick which invoices you want to pay. We'll help you out with approval and take care of fulfillment.