What Is an ACH Department?

An automated clearing house department is a nationwide system that performs automatic banking transfers. ACH transactions are also referred to as electronic funds transfers (EFTs).

Purpose

The ACH network is regulated by the National Automated Clearing House Association (NACHA). This network processes, delivers and settles all authorized banking transfers, including deposits and payments.

Functions

An ACH department processes automatic transfers of money. This includes direct payroll deposits, pre-authorized debits and credits for payments and receipts of money, and any other transfers.

 

Benefits

Transactions through the ACH department occur quicker and are a great alternative to paper checks. Direct deposit services offer customers quicker access to funds. Customers have a certainty of delivery when using this system to pay bills. It also decreases costs by reducing the use of paper checks.

 

Details

Many companies offer automatic bill payment options. Customers are required to sign up for these services, which are usually offered for free. To authorize electronic payments and deposits, customers must give the company their bank routing and bank account number. Customers must also sign an agreement to allow payment or deposit authorizations.

 

References

About the Author

Jennifer VanBaren started her professional online writing career in 2010. She taught college-level accounting, math and business classes for five years. Her writing highlights include publishing articles about music, business, gardening and home organization. She holds a Bachelor of Science in accounting and finance from St. Joseph's College in Rensselaer, Ind.