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B2B ACH Transfers: Everything Midmarket Businesses Need to Know

ACH Transfer

Same-day ACH transfers can be a boon to midmarket businesses, but they’re not a silver bullet.

ACH is getting a lot of buzz in recent news with same-day ACH transfers now sitting in Phase Three, the third and final phase of its two-year implementation process. While the implications of same-day ACH to accounts payable teams are exciting, this implementation means different things to businesses of different sizes.

For midmarket businesses, same-day ACH transfers can create a lot of opportunity for improvement within the accounts payable process. However, this improvement will likely come much more gradually than it does for larger corporations, depending on the selectivity of banks offering same-day ACH transfer services.

The Benefits of Same-Day ACH Transfers

First, let’s look at the benefits that same-day ACH transfers will provide to midmarket businesses:

Faster payment processing

One of the greatest benefits that same-day ACH transfers provide lies in their name: the money is transferred on the same day. This accelerates the settlement period that has historically been three days with traditional ACH transfers.

Faster payment processing is a boon for accounts payable teams, as they are able to benefit from increased command over short-term cash flow, and hang on to sums of money for longer amounts of time as it is beneficial to them.

Less expensive

Compared to many alternative payment methods, especially paper checks and wire transfers, same-day ACH transfers are way more cost efficient, with a ACH transfer fee of less than $1 each.

Paper checks incur a lot of costs for businesses from the postage and time spent manually preparing a postmarking envelopes for payments. On average, the cost of paying with paper checks is estimated to be $5.91 per check. In regards to ACH transfer vs wire transfers, banks charge between $10-$35 for domestic wire transfers, and international transfers cost even more. With businesses processing hundreds of payment each month, theses costs add up.

Less risky

Same-day ACH transfers still come with a level of risk, but it is far less than the level of risk assumed by businesses paying with paper checks of wire transfers. Paper checks were revealed as the top target for fraudsters in the AFP’s annual fraud survey, and the immediate availability of transferred funds makes wire transfer a risk as well.

In the wild, wild west that the world of B2B payments has become, a steady diet ACH transfers gives your business the best odds when it comes to fraud.

The Limitations of Same-Day ACH Transfers

While all of this sounds great if you’re a midmarket company, there is something important that you should know: Same-day ACH transfers are not ubiquitously offered to businesses by financial institutions.

In other words, banks and financial institutions verify businesses before offering both same-day ACH or traditional ACH transfers, and put businesses through a full underwriting process. This underwriting process is expensive and involves a lengthy application timeline. For this reason, banks are more focused on gaining large enterprises as customers that are processing higher volumes of payments to make this investment of time and money the most worthwhile. As a result, many midmarket businesses are struggling to get access to this valuable service.

However, even the midmarket businesses that have access to same-day ACH transfers have another factor that limits their ability to utilize it: a lack of support in their ERP.

With so many invoices to pay in a limited amount of time, accounts payable teams are less likely to step outside of the status quo to pay by ACH, and risk adding time to the process of queueing up a payment. That is, unless it is built into their payment process. However, accounting software designed for midmarket businesses doesn’t build ACH transfers into the accounts payable process, and for that reason, paper checks are still the most commonly used payment method.

While most accounting software for large enterprises does build ACH into the AP process, this discrepancy represents another way that large enterprises have an edge over midmarket businesses when it comes to ACH transfers as a payment method.

How Midmarket Businesses Should Approach ACH Transfers

Midmarket businesses should understand that ACH transfers are one option in a stable of other good B2B payment options that are available at their behest.

In the same way ACH transfer has its benefits and limitations, so does every other payment option. However, by taking a strategic approach to how you are paying your vendors, you can ensure you are using the most appropriate payment method at the most appropriate time.

The best approach for midsize businesses to take with ACH transfers is one that focused on utilizing it in as many appropriate contexts as possible, while utilizing alternate payment methods where they are most appropriate. Some examples of contexts where ACH transfers are most appropriate include when vendors do not accept a corporate credit card or virtual card, and when immediate payment is not necessary.

Some alternate payment methods to consider when you are paying your vendors in contexts outside of the ones most appropriate for ACH transfers include:

Commercial Card

Credit card that businesses provide their employees paying directly from a corporate credit line for business related purchases. Excellent option for making instantaneous payments to vendors that accept this payment method, and earns you an average of 1% back on rebates.

Virtual Card

Single-use, 16-digit number that issuers provide companies to pay for specific transactions. Excellent option for making instantaneous payments to vendors that accept this payment method, and also among the most secure payment options available today. This method also allows you to earn rebates.

Wire Transfer

Real-time payment method from one account to another. Among the riskiest payment options, as once payment is processed, funds are gone. This payment option should only be utilized when no other options are available.

Building an Optimal Vendor Payment Strategy Around ACH Transfers

Given the fact that the primary method for vendor payments today remains paper checks, the process of building a solid vendor payment strategy that includes the right balance of ACH transfers, commercial cards, and virtual cards is not going to happen overnight. However, there are steps you can take to immediately put yourself on track to getting there.

Find out which of your vendors accept commercial card purchases

Whether or not you are already utilizing a commercial card for vendor payments, it never hurts to reassess which of your vendors are accepting payments via commercial card. Every payment that you make will result in cash back for you, so ignorance of applicable vendors can be costing you money.

Start gradually shifting spend over to electronic payment methods

As discussed earlier, not every midmarket company will be able to originate same-day ACH transfers right away. While it can take time to apply and receive the service from your bank, it doesn’t hurt to start paying electronically wherever you can. Trying to pay more with a digital commercial card or virtual card is a good place to start, and even utilizing traditional ACH transfer services as they are available to you is also a step in the right direction.

Integrate your ERP with a cloud-based accounts payable automation solution

With a long and arduous process required to process and pay invoices, juggling all of these different payment options can seem like a battle that is not worth the fight.

Integrating your ERP with a cloud-based accounts payable automation solution not only streamlines the lengthy process of paying invoices, but it also provides a centralized access point to all of your payment options, including ACH, commercial card, virtual card, and even paper check. With this setup, businesses that are still primarily using paper checks today can easily begin transitioning away while continuing to pay with them as necessary.

Midmarket businesses that integrate with with these solutions are able to take a proactive approach to building a vendor payment strategy that optimizes their short-term cash flow, and gradually shifts their spend away from paper checks.

To learn how accounts payable automation can help your team shift spend to ACH transfers, contact MineralTree for a personalized demo.


Scott Siegler
Scott is the editor of MineralTree's Invoice-to-Blog, and also the curator of The Proper Payable, a weekly email newsletter covering the best (and worst) in financial strategy.


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