ACH update: Cost-effective transactions & new same-day limit

New research proves just how critical it is for your company to keep moving toward electronic payments via ACH – and how expensive it is to keep cutting paper checks.

Data from the 2022 Payments Benchmarking Survey, released by the Association for Financial Professionals (AFP), compares the cost of making and receiving ACH payments to the cost of issuing checks.

And the difference is substantial.

AFP estimates the median cost of initiating and receiving an ACH transaction for businesses is between 26 and 50 cents. This includes both internal costs (e.g., personnel) and external costs (e.g., bank fees).

When looking at the costs of ACH debits and credits, the median internal cost is 15 cents. The median external cost is 25 cents.

Paper checks are much pricier across the board.

Issuing paper checks cost a median price of between $2.01 and $4 per check. Receiving them had a median cost between $1.01 and $2.

Much of that cost is all the labor involved with paper checks, AFP said.

Your best bet is to work with A/P and A/R to make both your payment and collections processes fully electronic. Any tech investments needed to get there will quickly pay for themselves in full.

Same Day ACH changes

Going electronic will soon become even more appealing for companies that do business in large amounts. Here’s why: On March 18, 2022, the limit on Same Day ACH transactions will increase dramatically. It will rise from $100,000 to $1 million.

And when limits increase, more businesses participate in Same Day ACH transactions for larger amounts. In fact, after Nacha last raised the limit in March 2020, the dollar amount of Same Day ACH transactions increased by 46% after just two months, according to data from Nacha.

Plus, ACH traffic has been steadily increasing overall: ACH network payment volume has grown each year for seven years in a row. And most of that growth has been spurred by additional B2B payments and more Same Day ACH payments.

Using Same Day ACH can help companies meet key deadlines for big vendor payments and tax payments, as well as stay in compliance with state laws on termination pay, among several other time-critical uses.

In these cases, even with any added costs surrounding Same Day ACH, it’ll likely still be cheaper than relying on paper checks and dealing with potential late fees, interest on late tax payments or legal fees if state laws are broken.