How Long do ACH Transfers Take?

n any given day, you may send more electronic payments than you can keep track of. These payments, which occur as electronic money transfers between U.S. bank accounts, are known as ACH, or Automated Clearing House, transfers. ACH transfers facilitate faster payments than sending payments by check or even cash.

The ACH network has existed since the 1970s and is managed by an organization called the National Automated Clearing House Association (Nacha). According to Nacha’s quarterly reports, 29.1 billion ACH payments were made in 2021, equating to trillions of dollars moving electronically across the country between enterprises, household brands, small business owners, sole proprietors, and consumers.

Here’s everything you should know about debits and credits on the ACH Network, including how long they take, the advantages they offer small businesses, and how Novo handles ACH transactions. 

How Long Does an ACH Transfer Take? 

It can take from a few hours to 2-3 business days to complete an ACH transfer, but ACH transfers cannot be completed instantaneously like a wire transfer. The timeframe for ACH transfers varies depending on the time of day the request is made, as well as whether the transaction is a “pull” or “push” transaction.

Next business day: Debit or “pull” transactions 

When money is automatically debited from an account, it’s labeled as a “pull” transaction. Recurring bill payments are considered “pull” transactions. For example, your insurance company “pulls” your premium for your general liability coverage every month. These transactions are typically fee-free for the payee or the party receiving payment.

Nacha only requires ACH debits not to be processed prior to the date included on the authorization, and in general, you can expect a “pulled” transaction to be removed quickly from your account. 

Up to two business days: Credit or “push” transactions 

One-time transactions, where money is transferred online to an account held at a different bank, are considered “push” transactions. 

Examples include when you move funds from a checking to a savings account, transfer money to a vendor, or make an online payment. Depending on the platform and payment method, fees  could also be involved.

“Push” timelines are left up to the bank, credit union, or financial institution. There are also funds availability requirements based on the time window in which the transaction is settled. That, in turn, depends on when the “push” transaction is initiated. Typically these transactions could take up to two business days, depending on your financial institution’s self-imposed deadline. 

What Are the Benefits of ACH Transfers? 

Small business owners and freelancers may find it beneficial to use ACH transfers to send and receive payments for customer transactions, employee payroll, vendor invoices, tax payments, and other business-related needs. 

Here are several reasons these digital payments have become so popular.

Fewer fees

Businesses may wish to accept more customer payments in the form of ACH transactions, in lieu of credit card payments. 

This is because fees associated with receiving payments via credit cards quickly add up. In fact, credit card processing fees can range from 2.87% to 4.35% per transaction, and that’s not including other merchant or service provider fees. These fees generally cover the services provided by card network providers to connect with each other and transfer and settle payments.  

On the other hand, ACH payments can be free or cost significantly less for a business or sole proprietor. 

As your business grows and the number and size of your transactions increase, the savings provided by using ACH transfers can help reduce your overhead substantially.

Faster processing time

ACH transfers eliminate the need for paper checks, envelopes, stamps, and the time it takes to print, seal, and send a physical payment. Even after checks make it to the bank, it can take up to seven days for the checks to be processed and funds made available. Delayed processing times can be even more likely with large payment amounts or when they’re deposited into a newer bank account. 

Payments that once took time and materials to send can now be initiated in seconds, with a few simple virtual steps. ACH payments are also given preferred funding over paper checks, so these digital transfers almost always result in quicker access to funds.

Recurring billing

If your small business is built on a subscription-based model or you operate as a service provider with monthly retainer packages, then ACH transfers can help simplify your billing process. 

ACH transfers can decrease the likelihood of customers or clients forgetting to take care of their monthly invoices. This results in more consistent cash flow and allows employees to focus on daily operations instead of chasing down customers for payments.

Added security

Check fraud, where scammers pay for goods using a stolen or counterfeit check, is one of the most common acts of fraud committed against small businesses. Physical paper trails can also leave the door open to identity theft. But with ACH transactions, funds are securely sent between parities – without the paper trail. In addition, your information is encrypted when sent to and from the ACH Operator (most commonly, the Federal Reserve). Therefore, these digital payments are far less likely to be lost in transit or end up in the wrong hands.

ACH Transfers with Novo

Novo provides digital business checking accounts, specifically with sole proprietors, LLCs, and corporations in mind. ACH transfers can be sent to and from a Novo business checking account, completely fee-free.

To free up your cash flow and reduce waiting time further, Novo also offers Express ACH. While typical ACH transfers take between 1 and 3 days to process, Novo Express ACH enables you to initiate same-day or next-day ACH transfers for a nominal fee.

If your business operates internationally, keep in mind that ACH transactions are available only for funds transferred between accounts in the United States. However, you can use wire transfers to move funds to other countries. 

To make international transfers as simple and cost-effective as possible, we’ve teamed up with Wise. Companies and independent professionals can sign up for a Wise for Business account directly in the Novo app. This will unlock the ability to send money abroad in multiple currencies with a guaranteed mid-market exchange rate and no hidden or exorbitant fees.

Now, business owners can send both international wire transfers and ACH transfers from within the same business banking platform.

ACH Transfers Make Payments Simple for Business Owners

Thanks to ACH payments, small businesses, sole proprietors, and consumers can transfer funds affordably, conveniently, and safely. To learn more about the features of Novo business checking accounts, including express ACH transfers, sign up for your free business account today.

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This page is for informational purposes only and is not intended to be relied upon as legal, financial, or accounting advice. Please consult your own professional if you have any questions.