We all know that waiting for payments to go through can be a real pain. Traditional payment methods, including regular ACH transfers and same-day ACH, can’t keep up with our fast-paced world. Luckily for small business owners, accountants, and bookkeepers, a solution is on the horizon. With the recent release of FedNow, some experts are asking if the game-changing FedNow Service will make same-day ACH a thing of the past.
Not exactly Same-Day ACH
Waiting for same-day settlement can be a drag, especially when you need access to funds then and there. The limits of same-day ACH transfer become pretty obvious when we consider the needs of a modern business. While through its name, it promises transactions on the “same-day,” the reality is that it’s still not as speedy and flexible as most businesses need it to be. Same-day ACH transfer operates on the traditional 9-5 banking hours, so if you need to make payments on evenings, weekends, or holidays, you’re completely out of luck. Even on business days, if you submit a payment too late in the day, you’ll still be waiting ‘til tomorrow for it to go through.
Another major downside of same-day ACH is the lack of real-time visibility. Since it processes payments in batches, accountants and business owners are often left in the dark about when exactly a payment will go through. A real headache with making payments when it comes to managing your cash flow and reconciling payments with your books. Without up-to-date payment statuses, you’re essentially playing a guessing game. That’s far from ideal when as a consumer, you can open up an app like Zelle, Venmo, or Cash App to transfer money instantly.
Business payments deposited in seconds
Instant payments, as the name suggests, are payments made through specialized payment networks designed by The Clearing House (RTP®) and The Federal Reserve (FedNow®). Payments made through these real-time networks provide access to funds in seconds and enable real-time transactions. This has brought about a paradigm shift in the world of business finance, offering small businesses enhanced convenience, improved cash flow management, and increased financial agility.
The FedNow Service, developed by the Federal Reserve, is at the forefront of the instant payments revolution. Launched with over 57 early adopter organizations certified as “Ready”, FedNow is designed to provide instant and secure payment capabilities 24/7/365. Alternatively, RTP from The Clearing House has been around since 2017, although many banks haven’t made the technology readily available on their banking platforms. Payment platforms that use instant payment networks enable small businesses to enjoy the benefits of faster and more efficient transactions.
Peace of mind and saving time
With faster payment methods, businesses can experience improved cash flow, timelier payments, and greater financial control. By eliminating batched transactions and settlement delays, businesses have an opportunity to experience increased liquidity and enhance their operational efficiency. Even better, because instant payments are available 24/7/365, business owners, accountants, and bookkeepers can attend to invoice and bill payments whenever suits them without being restricted by traditional banking hours. If given a choice between a payment method that will settle the next day, and one that will process in 22 seconds or less, it’s clear that only one provides the confidence and visibility businesses need to survive. Bid farewell to the age-old limitations of ACH transfer and checks. Instant Payments are game-changers, giving small businesses speed, convenience, and flexibility.
The future of finance is now, and companies using instant payment solutions are leading the way. Welcome to the era of 24/7 faster payments.