ACH (Automated Clearing House) is a network that electronically moves money between bank accounts across the United States.
It’s run by an organization called Nacha (previously NACHA - National Automated Clearing House Association) and may also be referred to as the ACH network or ACH scheme. Nacha controls the time for those funds to clear since all ACH transactions are run through their system.
Since they continue to use the same legacy technology from when it was initially created (back in the 1970s), all ACH transactions take 2-7 business days to fully clear. This is based on the bank from which the transfer is initiated and the bank receiving the funds.
Image 1. ACH Payment Processing
ACH Pull vs. ACH Push
The difference between an ACH Pull and an ACH Push is the originator of the request. With a pull payment, the supplier takes the money from the account; with a push payment, the account holder sends the money. A push is rejected when there are insufficient funds in the source account.
Image 2. ACH Pull vs. ACH Push
In this case, the Client is sending invoices with ACH information. Their Payers then manually send ACHs to their business bank account. The Client must then match the deposits they’ve received in their bank account with the Invoices that match that and mark those as paid. They only know an Invoice is paid once the deposit comes in.
Paystand takes care of a lot of these things for the Client. Instead of ACH information at the bottom of the Invoice, there will be a [Pay Now] link that leads to a digital checkout with several payment options, including ACH.
Once that checkout is paid, Paystand marks that Invoice as paid within NetSuite. Once the deposit clears, Paystand then deposits the funds into the client’s bank. We match the deposit to the invoices that were paid in that deposit. One of the key differences is that Paystand marks the Invoice as paid as soon as the checkout is completed and then follows the cash application until its deposited.