Finance Executives Can Analyze Wiring Vs Ach For Accounts Payable Automation

Wiring Vs Ach

When looking for an accounts payable automation software, finance executives should analyze the costs, fees, and post-payment reconciliation options associated with wiring and the Automated Clearing House (ACH) payment methods. This vital analysis can ensure the best financial decisions and ensure healthy payment schedules for the long-term.

Wiring payments involves processing transactions through network of banks and is typically used when there is an immediate need for money. The fees associated with wiring vary based on the banking institution; they are generally higher and can add up quickly. Additionally, there is an additional wire sent to reconcile the payment, meaning more fees, and more time spent reconciling post-payment information.

On the other hand, ACH payments are handled electronically. Funds are routed straight from the company, to the recipient?s bank. ACH payments cost significantly less than wiring, and they are primarily ?batch? based process so they take longer to process. Another benefit of the ACH process is that vendors no longer need to settle quickly because it is done by the bank, allowing more time for reconciliation tasks. ACH payments are also beneficial as they can eliminate the need to manually reconcile payments with paper statements, or email confirmations.

Executives need to determine the best payment method for their accounts payable automation software considering their needs and outflows. Each payment method comes with its own set of costs and fees as well as its own post-payment reconciliation options. Wiring offers the speed of an immediate payment but also comes with high fees and the need to send an additional wire to reconcile the payment. When looking to cut costs and streamline the post-payment reconciliation, executives should consider the ACH payment method, with its batch processing and low fees. Finance executives should weigh the advantages and disadvantages of both payment methods to find the one that best fits their accounts payable automation software.