ACH: Meaning in a Merchant Cash Advance
ACH stands for Automated Clearing House, the U.S. network that moves electronic payments between bank accounts in batches. Payroll direct deposits, bill payments and most merchant cash advance debits travel over it.
What does ACH mean?
An ACH payment isn't instant. The sender's bank groups payments into files and passes them through the network, and the receiving bank posts them on a set schedule. A standard ACH transfer settles in one to two business days. An ACH debit lets a company collect from your account once you've authorized it, which is how a funder takes its daily or weekly remittance.
Why does ACH matter to your business?
Your MCA payment is only as predictable as the ACH schedule. Debits post on business days, so a Monday statement often shows the funder's debit along with anything that didn't process over the weekend. Holidays shift the calendar. Knowing when debits land helps you keep enough in the account to avoid returns.
Which ACH rules protect you?
- A company needs your authorization to debit your account.
- You can dispute an unauthorized debit with your bank, within the time limits the network sets.
- Nacha, the organization that runs the network, publishes the operating rules at nacha.org.
What should you avoid with ACH debits?
Blocking a funder's authorized debit without a conversation first is usually a default under the contract. If a debit is too heavy, call the funder about reconciliation before you touch the ACH authorization.
Where will you see it?
On bank statements, where ACH debits show the funder's name or a processing company's name. In the ACH authorization form in your merchant agreement. In deposits from card processors and payment apps, which also usually arrive by ACH.
Which terms are related to ACH?
The full list is in the glossary. Owners ask about this in What does an MCA payment look like on my bank statement?.
A term on your offer you don't recognize?
Send us the line and we'll tell you what it means. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.