In today's rapidly expanding subscription economy, managing a subscription business’s finances effectively and efficiently is crucial to its success. One of the most important tools that a subscription business can use to receive recurring payments is the ACH payment system.

What is ACH?

ACH (Automated Clearing House), is a US financial system that facilitates electronic money transfers and payments. It is a secure and reliable payment system that is widely used in the US for recurring transactions such as payroll deposits, bill payments, business-to-business transfers, and all types of subscription services.

Compared to credit card payments, ACH transfers are more efficient and generally less costly for subscription businesses to process, with subscription payments going directly into their bank accounts. Leading subscription billing platforms such as Billsby are integrated into numerous payment gateways facilitating ACH payments.

This article explains the use of the ACH payments system by subscription businesses, highlights its benefits, and provides tips as to how to streamline your business’s finances by utilizing the ACH system.

The benefits of ACH payments

ACH payments offer numerous advantages to subscription businesses including:

1. Cost

ACH transactions are generally more cost-effective for recurring payments than traditional paper checks or credit card payments.

2. Security

ACH payments are more secure. They are protected by robust encryption and authentication methods, reducing the risk of fraud and unauthorized access.

3. Convenience

Processing ACH payments is convenient for both payers and receivers. Payments can be scheduled in advance, and there's no need to write checks or visit a physical bank. This convenience is particularly valuable for recurring payments, like monthly bills or subscription services.

4. Faster transactions

ACH payments are faster than traditional paper checks, which may take days to clear. Using the ACH payment system, funds are typically transferred within a few business days, ensuring quick access to your money.

5. Reduced errors

ACH payments reduce the likelihood of errors associated with the use of paper checks for recurring payments, such as handwriting mistakes or checks lost in the mail.

6. Eco-friendly

ACH payments minimize the consumption of paper and other valuable resources.

Accepting ACH payments

The process of accepting ACH payments from subscription customers involves the following steps:

1. Select an ACH payment processor

To process ACH payments, you'll need to choose an ACH payment processor/payment gateway. Processors provide the necessary tools and technology to facilitate ACH payments. Popular options include Stripe, PayPal, and Square, all of which are integrated into Billsby.

2. Create an ACH account

Sign up for an ACH account with your chosen payment processor. You’ll be asked to provide some basic information about your business or personal account.

3. Verify your bank account

You must link your account to your ACH account. This involves providing your bank's routing number and your account number. The payment processor will verify this information to ensure accuracy.

4. Set up payment options

After your bank account has been verified, you can establish payment methods for your subscription customers. This may include creating an online payment portal, embedding payment buttons on your website, or sending payment links via email.

5. Notify customers

Inform your customers or clients that you now accept ACH payments. Provide them with the necessary information, such as your ACH account details and payment instructions.

6. Receive ACH payments

When clients initiate ACH payments, the funds will be deposited directly into your linked bank account. You can track and manage these transactions through your ACH payment processor's dashboard.

7. Reconcile payments

Regularly verify your ACH payments to guarantee their accuracy.

Tips for streamlining your finances with ACH payments

To fully leverage the benefits of the ACH payment system and streamline your finances, consider implementing the following:

1. Automate recurring payments

For subscriptions, bills, and regular expenses, set up automated ACH payments to ensure that you collect all due payments and simplify your budgeting.

2. Use ACH for payroll

If you're a business owner, consider using ACH payments for payroll. It's a secure and efficient way to pay your employees and contractors.

3. Offer ACH payment discounts

Encourage subscription customers to choose ACH payments by offering discounts or incentives. This can reduce processing fees for your business and provide savings for your subscribers.

4. Implement payment reminders

Send payment reminders to subscription customers before payment due dates. This can help reduce late payments and improve cash flow.

5. Optimize payment processing times

Be mindful of the timing of your ACH payments. Consider scheduling them strategically to match your cash flow needs.

6. Regularly review transactions

Periodically review your ACH transactions to identify any discrepancies or irregularities. Promptly address any issues to maintain financial accuracy.

7. Educate employees and customers

Ensure that your employees and subscription customers are well-informed about ACH payments and how to use them effectively. This can help prevent errors and misunderstandings.

8. Stay informed about regulations

Keep up to date with ACH payment regulations and compliance requirements.

Conclusion

Optimizing financial efficiency is an essential component of a successful subscription business. Accepting ACH payments from subscribers will assist your business in achieving this goal. The benefits of utilizing ACH payments include cost-effectiveness, security, and convenience, making them a compelling choice for subscription businesses.

By following some simple steps, accept recurring ACH payments, optimize your financial management, and enjoy the advantages of this efficient payment method. Embracing the ACH payments system is not only a smart financial move but also a step towards achieving a more streamlined and secure financial future for every subscription business.

About us

Billsby is a sector-leading cloud-based subscription billing software company, that helps businesses manage the issuing of invoices and the collection of recurring payments, whilst providing award-winning customer service support. Ranked by G2 as the Number 1 subscription billing platform, Billsby streamlines billing operations, offers flexible subscription management, integrates with various systems, and provides real-time analytics, enhancing efficiency and scalability.

Billsby provides the simplest and easiest solution for subscription businesses choosing to adopt a subscription billing model, helping them maximize their subscription revenue potential. For more in-depth guidance and bespoke solutions, visit www.billsby.com today.