For more than 40 years, direct deposits into bank accounts through the U.S. Federal Reserve’s “Automated Clearing House” (ACH Direct Deposits) have been the business world’s most reliable, most convenient way of transferring funds. In 2015, more than 24 billion ACH transactions moved more than $41.6 trillion through our nation’s economy. Founded in 1974, this clearinghouse system has become such an integral way of doing business that it is almost hard to imagine the old system of writing checks, mailing checks, and waiting for checks to be received and cleared.
Factoring companies – which provide fast payment on their clients’ outstanding invoices – rely on the ACH process for the safe and near-immediate transfer of funds. Most factoring companies provide free ACH direct deposits to clients. Typically, a factoring company will set daily deadlines for processing ACH funds to clients’ accounts; these timeframes are driven by the Federal Reserve’s cutoff times in the Eastern time zone. When clients submit verified invoices, the factoring specialists go into action to get those clients paid as quickly as possible, saving them from having to wait 30, 60, or even 90 days for their customers to pay those bills. Factoring companies typically offer other payment options to clients, such as wire transfers (usually at a fee), fuel advances, and, of course, paper checks.
Benefits of ACH Direct Deposits
- Speed of availability of funds in clients’ bank accounts
- Ease and convenience of accessing funds
- Safety of financial transactions