Bill Pay vs. ACH: What’s the Best Way To Pay Your Vendors?
One of the most frequent transactions small business owners make is paying bills to vendors. In fact, how business owners manage this task can have a significant impact on their overall cash flow.
Bill pay vs. ACH, explained
When it comes to paying vendors, using a debit card or processing ACH transfers tend to be the most typical methods. Paying bills with a debit card means initiating a transaction that’s processed by your card’s merchant and is directly linked to your business checking account. ACH is an abbreviation for Automated Clearing House, which is a network that moves funds electronically from bank to bank.
Each method has unique qualities that may affect your financial routine. How can each apply to you and your business? Here’s a breakdown:
| Bill Pay | ACH | |
| Speed | Within 24 hours | 3–5 business days |
| Authorization | Customer authorizes the payment each time a bill is generated. | Customer shares bank account number to authorize ongoing payments. |
| Assurance | Funds are guaranteed to the receiver. | Funds are liable to be rejected if unavailable. |
| Processing Fees | 0.5%–2% | Free (usually) |