Today’s the Day for Same-Day (Debits)

by Sarah Grotta 0

Today is the day that financial institutions (FIs) will begin accepting same day ACH debits.  Most FIs will not only accept but also originate same day transactions.  An article in Treasury and Risk takes a look at opportunities for large corporates to integrate same day debit into their operations:

The primary reasons to use same-day ACH debits are to save time and money; to improve convenience for customers, particularly by providing a faster payment option for consumers; and to expedite payments to trusted partners for goods and services. When a company allows a vendor to receive payment by initiating an electronic debit to one of its bank accounts, instead of waiting for it to drop a check in the mail, the ACH debit process can significantly improve efficiency for both parties. Companies may find that same-day ACH debits are useful for making state and local tax payments, loan payments, and routine vendor payments, among other transactions.

 It also reviews operational impacts that corporations should consider before using same day debits, including timing, cash application and controls.  Controls are probably of greatest concern to those venturing into faster transaction processing options.   There is a $25,000 per transaction cap imposed on same day ACH transactions, but further internal controls are needed too:

Companies that will originate or accept ACH debits should consider working with their vendors and business partners to create controls. A first step is to amend contracts to clarify whether and how the business will originate or accept ACH debits. This will help reduce confusion, and possibly even ill will, among the trading partners.

Treasurers who want to control their company’s debit receipts should also speak with their banks to enroll in their ACH block or filter services. An ACH block signals to financial institutions that the account either does not accept ACH debits or does not accept any ACH transactions (it must specify which). A filter, by contrast, allows certain preapproved ACH entries—such as transactions with a particular vendor, lender, or other specified party—while blocking all other ACH debits. Without the appropriate blocks or filters, an ACH transaction can post to a company’s accounts at any time.

Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group

Read the full story here