B2B Payments

Same Day ACH An Opportunity For Suppliers, Analysts Say

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Receivable Savvy, an accounts receivable and order-to-cash management firm, wants suppliers to see Same Day ACH as an opportunity to bolster cash flow.

The company, which provides education and resources for suppliers, recently released a new eBook to guide vendors on how to take advantage of Same Day ACH technology. The Definitive Guide – Same Day ACH argues that not only can Same Day ACH mean faster supplier payments, but the technology presents a host of other benefits for B2B vendors.

But being able to accept this type of payment, Receivable Savvy warned, takes deliberate understanding of the technology. These companies must first communicate with their corporate customers to see whether receiving funds via Same Day ACH is even an option. That means businesses on both sides of the transaction should be aware of cutoff times for ACH payment submission and collections and whether their financial institutions provide payment confirmation.

Taking advantage of Same Day ACH, the company noted, also means understanding how NACHA will roll out the technology.

“We’ve worked closely with NACHA over the last year, and we see the value Same Day ACH provides to supplier organizations to expedite payment,” said Receivable Savvy Founder and Managing Director Ernie Martin in a statement this week announcing the eBook. “We wanted to provide a quick-reference guide for suppliers on what Same Day ACH is, the differences between Same Day and ‘classic’ ACH payments, and how they can leverage this new option to meet their financial objectives.”

Martin was recently named to lead a subgroup under the Federal Reserve’s Business Payments Coalition; an announcement in January said the executive will spearhead the group and collaborate with its participating FinTech, software, corporate and other industry players to explore B2B payments automation, efficiency and innovation.

Same Day ACH has reportedly already gained significant traction. According to NACHA, between Sept. 23 and December 31, 2016, more than 13 million Same Day ACH transactions were initiated, with nearly a third of them being B2B payments. The majority of the value of those payments — totaling nearly $17 billion — were also attributed to B2B payments.

NACHA’s rollout plan for Same Day ACH includes several changes supplier must note. For instance, NACHA created a standard way to identify Same Day ACH payments, creating two windows during which financial service providers can initiate an ACH payment and requiring these institutions to receive same-day credits in 2016, with requirements for them to receive same-day debits this year.

Receivable Savvy also answers several questions suppliers may have about the technology, including noting that the cost of accepting Same Day ACH depends on the vendor’s financial institution (not NACHA) and that the transaction maximum for a Same Day ACH payment is $25,000.

Same Day ACH cannot be used for international B2B payments, though a crucial benefit of the initiative for B2B payments is that it includes electronic remittance details for more efficient reconciliation – that includes the ability for suppliers to close out invoices with the information send along with a payment, like invoice number.

And while suppliers can access funds more quickly when they receive a Same Day ACH payment, Receivable Savvy also added that all ACH payments are verified to ensure that transactions are secure. The company identified reduced collections risk, improved cash application cycle times, reduced days sales outstanding and improved cash flow as key benefits to Same Day ACH for B2B suppliers.

Indeed, NACHA surveyed 23 financial institutions to analyze Same Day ACH adoption and found that no institution reported experiencing an increase in fraud since implementing Same Day ACH.

The eBook was released as Receivable Savvy gears up to release the results of a survey on how suppliers feel in the current B2B payments climate. Its 2017 Perceptions Study found that 80 percent of B2B supplies said their number one issue in accounts receivable is to receive payment faster.

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