ACH services are widely known and accepted now, but they do have a beginning. These services have solved a lot of problems and headaches, but have also been a long time coming. The idea first started back in the 70's and has come to full fruition today.
What Inspired ACH?
Many businesses were having a hard time staying on top of all of their financial obligations. The papers were stacked so high that it was impossible to sort through. There was no hope for employees, however great in number, to be able to keep everything organized. In fact, there was great concern that even computer systems wouldn't be able to sort through the high volume of paper statements the company acquired. This drew the attention of the Federal Reserve, and they decided to step in and help the companies out. They provided the necessary software and equipment to sort all of the payments and deposits out. In just a few short years it was apparent that this was very successful. Because of this, the Federal Reserve made it official and ACH services expanded nationwide.
How Does the ACH Process Work?
First of all, the person or company receiving the payment must authorize the party responsible for the payment to have limited access to their account. Then the receiver must notify their institution that they have given permission for the payer to either debit or credit the account, depending on circumstances. Once this formality is complete, the transactions can take place as frequently as has been authorized. This can be used to pay employees, or even to pay recurring bills.
What Are the Benefits and Drawbacks?
The biggest benefit of ACH services is that they cut back immensely on paperwork. This means no filing, no wondering where you put that bill. You no longer have to sort through a pile of mail and try to remember what you've paid, or if you've been paid.
The biggest drawback would be familiarizing yourself with a new system and way of doing things. Instead of having everything written on paper and hands on, it is now all done on computer. If this is uncharted territory, it can be intimidating and leave you feeling rather insecure about your finances.
ACH services are doing a great deal to aid our country. They are of financial benefit to businesses, families and individuals. They save time, energy and are economy friendly. In a world where things are constantly changing and advancing, this system is above par.
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