As your business grows, you need tools to help streamline operations. Automated Clearing House (ACH) can help you digitize payroll and vendor payments, saving time and resources.
What is ACH?
ACH is a type of electronic payment that transfers funds between U.S. bank accounts through a network of financial institutions. Established in the 1970s, the ACH network enables you to electronically move funds between your bank account and a vendor or employee bank account.
Trillions of dollars route through ACH payments each year, including PayPal, Venmo, and Zelle®¹ transactions. In fact, 2025 was a record year² with 35.2 billion ACH payments, averaging 141 million daily transactions.
How do ACH payments work?
There are two types of ACH payments: credit and debit.
ACH credit
With an ACH credit, also known as a direct deposit, you “push” funds from your bank account into an employee’s or vendor’s bank account. The payer initiates the transaction. It takes three steps:
- Step 1: Obtain the vendor or employee’s name, bank name, account type, account number, and bank routing number.
- Step 2: Submit payment details through Wells Fargo Business Online® or Commercial Electronic Office® (CEO®) ACH, including the account information and payment amount.
- Step 3: The funds transfer from your account on the designated date.
For recurring payments, such as payroll, rent, or mortgage, you can use the ACH network to set up automated ACH credits.
ACH debit
For an ACH debit, also known as a direct payment, money is “pulled” from one account to another. With the payer’s permission, the recipient initiates the transaction to withdraw funds from the payer’s account. The payer provides the recipient the same banking information as listed in Step 1 above. The recipient submits the payment file to their bank and pulls funds from your bank account.
For example, you might set up automated ACH debit for your utility bills, which arrive monthly but vary in cost each month. See how direct payments can help your business.
How can I use ACH?
Some 93% of American workers receive their pay through the ACH Network.² But ACH has other useful applications for businesses, too. For example, you can use the ACH network for:
- Employee payments, such as reimbursed travel expenses or 401(k) contributions.
- Vendor payments, including those for suppliers, rent, or utilities.
- Government payments, such as tax payments and refunds, Social Security payments, and stimulus payments.
- Investment dividend and interest payments, including monthly payments.
What are potential advantages of ACH?
There are several advantages for your business in using ACH payments.
- Cost savings: ACH payments are less expensive compared to paper checks, credit card transactions, and wire transfers.
- Convenience: You will no longer need to take time printing, signing, and mailing paper checks, and making runs to the post office or bank. You can make ACH transactions from your office or while working remotely at home. The automated process of the ACH network makes it easy to schedule recurring payments, so there’s no need to set a calendar reminder or keep track of paper invoices for these standard charges.
- Faster processing times: ACH payments can take one to three days to complete while same day ACH transactions can be completed on the same business day. That fast turnaround can help with your cash flow and let you know sooner if a payment from a vendor is declined.
- Security: ACH payments limit the need to mail paper checks, which are vulnerable to fraud. Your personal and account data are encrypted with each ACH transaction, for your protection. If there are any ACH errors or fraud, there are rules and regulations in place to help protect you.
- Consistency: By scheduling recurring ACH payments, you’re creating a more consistent cash flow that’s easier to forecast.
How do I get started making this type of ACH transaction?
It’s easy to establish ACH payments for your business. Wells Fargo has one of the largest ACH systems in the country and lets you search up to 13 months of originated activity and delete or reverse erroneous transactions.
Talk to your banker today or make an appointment to find out how to set up ACH payments. Your banker can provide information on enrollment, limits, fees and more.
