The automated clearing house has been around for years and is widely used in our country today. Nearly every person is involved with this payment system in one way or another. This system can be used for direct deposit, direct debit and company to company payments. These are just a few of the many ways this system is put to use each and every day.
What is Direct Deposit?
Direct deposit deals with the money you earn from working. If you are paid every two weeks, then you get the check in the mail a day or two after payday. Then you have to find a time to go down to the bank and deposit it. However, if you set up direct deposit with your bank and employer, all of these inconveniences disappear.
When you sign up for direct deposit, your bank is then notified that you have given permission to your employer to make periodic deposits to your account. You do this by simply giving them your bank's routing number and your account number. Then, as soon as your paycheck is cut, it is deposited into your account. It is immediate and there is no more waiting when you use the automated clearing house system.
What is Direct Debit?
Direct debit is just the opposite of direct deposit. It has to do with bills you get in the mail each month. This could be rent, utilities, cell phone or a gym membership. Rather than worrying about sorting through them and getting them back in on time, you can set up direct debit with these companies. You once again give permission to access your bank, and give your information to the company. Then, when the bill comes, it makes an automatic withdrawal from your account. This way you never have to worry about missing a payment or having a late fee.
What are Company to Company Payments?
A company to company transaction usually involves much more money than those previously mentioned. This type of transaction would involve a large company, such as a grocery store, and their supplier. The store may buy a set amount of a specific product each month. If this is the case, the payment can be done just the same to avoid any complications.
The automated clearing house system is a great way to operate finances regardless of your situation. It takes the hassle and confusion out of the situation and brings order and organization.
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