- ACH origination lets businesses send and collect payments electronically through their credit union.
- It is one of the most requested treasury services and a strong reason for a business to move its operating account.
- A sound program pairs the service with exposure limits, underwriting and member training.
ACH, the Automated Clearing House network, moves money electronically between financial institutions in the United States. When a business member uses their credit union to send payroll or collect a payment by ACH, the credit union is acting as the originating depository financial institution, and the member is the originator.
How business members use ACH
- Payroll direct deposit for employees.
- Vendor and supplier payments without writing checks.
- Collections such as recurring customer payments, dues and subscriptions.
- Tax payments and transfers between accounts at other institutions.
Same-day ACH
Same-day ACH lets eligible payments settle the same business day, which helps with late payroll changes and urgent vendor payments. Offering it means setting clear cutoff times and communicating them to members.
Managing ACH risk
ACH origination creates credit and fraud exposure for the credit union, so a strong program includes:
- Underwriting and an exposure limit for each originator.
- Dual approval and secure user entitlements in business online banking.
- Monitoring for unusual files, returns and unauthorized entries.
- An annual Nacha rules compliance audit and current policies.
- Positive pay and ACH debit blocks to protect members from fraud.
Onboarding business members to ACH
- Complete the ACH agreement and underwriting.
- Set limits, approvals and user access.
- Train the member on building and approving payments.
- Run a test file, then go live with close support for the first few cycles.
ACH is often the first service a business adopts, and it is a natural entry point to the rest of treasury management.
Frequently asked questions
What is ACH origination?
ACH origination is the ability for a business to send or collect payments through the ACH network using its financial institution.
Can small credit unions offer ACH origination?
Yes. With the right policies, technology and partner support, credit unions of many sizes offer ACH origination to business members.
What is the difference between ACH and wires?
ACH payments are batched and low cost, and usually settle the same or next business day. Wires move individual payments immediately and cost more.