Handbook / Invoicing and getting paid

ACH payments for small businesses: how bank transfers work

For many business clients, a bank transfer is the default way to pay an invoice. In the US, most of those transfers travel over the ACH Network. Offering ACH can speed up payment and reduce fees compared with cards. This guide explains how it works and how to use it safely.

What ACH is

Nacha, which governs the ACH Network, describes it as a payment system that reaches all US bank and credit union accounts. Direct deposit, direct payments, bank transfers and eChecks move on the ACH Network. Nacha says ACH payments can be processed within hours on the same business day, or scheduled for the following day or two business days away.

There are two directions:

• ACH credit: the payer sends money to you, for example when a client pays your invoice from their bank.
• ACH debit: you pull money from the payer's account, with their authorization, for example for recurring retainers.

Ways to accept ACH

Direct to your bank account. Put your business bank details and payment reference on your invoice. Simple and often free to receive, but you must reconcile payments manually.

Through your bank's business tools. Many banks offer ways to request payments or set up debits.

Through an invoicing or payment provider. Invoices include a "pay by bank" option. The provider handles the transfer and often matches payments to invoices automatically, for a fee.

Use a business bank account, not a personal one, for client payments.

Timing

Payments are not always instant. Allow for processing time when setting payment terms, and tell clients when payment should be sent to arrive by the due date.

Costs

Fees depend on your bank and provider. Some charge nothing to receive a transfer, others charge a flat fee or a percentage. For large invoices, flat-fee ACH can cost much less than card payments. Compare total costs for your usual invoice sizes; see accepting card payments.

Authorizations for debits

If you will pull money from a client's account, get clear, written authorization first. It should state the amount or how it is calculated, the timing, and how the client can cancel. Providers usually build authorization into their checkout. Keep records of every authorization.

Returns

ACH payments can be returned, for example for insufficient funds, a closed account or an unauthorized debit. Ask your provider how returns work, how long they can take, and what fees apply. For new clients and large first invoices, wait until funds have cleared before releasing work.

Fraud risks

Bank transfer fraud often targets invoices:

• Changed bank details. Scammers impersonate suppliers or freelancers and send "updated" bank details. Always confirm a change by phone using a number you already have, not one in the email.
• Fake payment confirmations. Check your bank account, not a screenshot.
• Compromised email. Use multifactor authentication on email accounts; CISA urges small businesses to adopt it.

Tell clients on your invoices that your bank details will never change by email alone.

Records and taxes

Record each payment against its invoice, with the date and reference. Payments received through a payment app or provider may be reported to you on Form 1099-K, depending on how they are processed. Either way, all business income is reportable; see Form 1099-K.

Adding ACH to your invoices

Include:

• your business name as it appears on the account
• bank name, routing and account number, or a secure payment link
• a payment reference, such as the invoice number
• the due date
• a note about how to confirm any change in details

Send bank details only to known contacts, and consider using a secure payment link instead of plain-text account numbers. See how to invoice.

Choosing between ACH and cards

Many businesses offer both: ACH for larger invoices and business clients, cards for smaller amounts or clients who prefer them. State your preferred method on invoices and make it the easiest option to choose.

ACH moves money between US bank accounts, often more cheaply than cards; accept it through your bank or a provider, get written authorization for debits, allow for timing and returns, and verify every bank-detail change by phone.