This fall — even as some treasury managers are just beginning to explore the many uses for same-day ACH credits — there will be new opportunities to enhance cash flow and customer relationships with the introduction of same-day ACH debits.
The same-day ACH initiative of NACHA – the Electronic Payments Association – kicked into high gear in the fall of 2016 when banks were empowered to begin offering same-day ACH credit origination capability.
Previously, ACH payments required at least one business day before they would be effective. For instance, for payroll, ACH originators had to send their files at least a day before their bank’s cut-off time in order for employees to have funds direct deposited into their accounts the following morning. But now ACH credit “push” payments initiated by Hancock and Whitney Bank’s noon Central Time cut-off time can be posted to the receiving institution by the end of business on the same day, if clients request same-day service.
More than just emergency payroll
Using same-day ACH credits for emergency payroll solutions is just one of the many ways companies can benefit from this faster new electronic payment alternative.
For example, we have one client who routinely uses the same-day ACH credit to pay employee reimbursements on the final business day of the month, so all expenditures can be folded in neatly and posted into one cycle or quarter for reporting.
Also, we have a client who pays his vendors with same-day ACH to keep funds available in his account until the invoice due date, in order to extend his cash positioning.
New opportunities with same-day debits
NACHA’s same-day ACH initiative entered its second phase this fall. Sometime shortly after NACHA’s implementation date, our clients can originate same-day ACH debits after contacting their treasury sales associate to activate this feature.
The rules for same-day ACH debit “pull” payments will be similar to those for credits. Individual transactions must be domestic and no more than $25,000 (although batches can exceed that amount). Same-day debits must also meet Hancock and Whitney’s noon Central Time cutoff for submission and approval.
Treasury managers in many time-sensitive industries will be able to benefit from same-day debits, for both consumer-to-business and business-to-business payments. Some particularly strong candidates are consumer-facing businesses such as insurance companies, utilities and any that collect regular membership fees or dues, such as health clubs and homeowners associations.
By adding same-day debits to their operations, businesses will be able to collect more efficiently and reduce check and cash deposit volumes.
Explore same-day ACH possibilities
The popularity of same-day ACH credits continues to grow as more clients learn about the potential advantages, and the new same-day debit capability promises to offer similar opportunities for improving daily cash management and customer relationships.
It’s well known that same-day ACH is ideal for emergency payroll, but it can streamline other types of payables and receivables too. Same-day ACH debits can accelerate cash flow and bolster cash positioning, as well as speed up the exceptions process.
Talk to one of our treasury services specialists to consider all of the possibilities.