What is an ACH credit?
An ACH credit is a type of electronic payment made through the Automated Clearing House (ACH) network, where funds are "pushed" from one bank account to another. In an ACH credit transaction, the sender initiates the payment, and the recipient receives the funds directly into their bank account—no paper checks, no wire transfers, no delays.
For small business owners, ACH credits are commonly used for things like paying employees, issuing vendor payments, or receiving direct deposits from clients. They’re fast, secure, and cost-effective. If you're looking to simplify payroll with ACH direct deposits, a payroll software can automate the process for you.
How ACH credits work
ACH credits are initiated by the payer, who instructs their bank to send funds to a recipient’s bank account. Here's what happens behind the scenes:
- You enter payment details (amount, recipient, bank info) into your payroll software or bank portal.
- Your bank submits the payment request through the ACH network.
- The recipient’s bank processes the deposit and credits their account.
The transaction usually takes 1–2 business days to settle, although some banks offer same-day ACH processing.
ACH credit vs. ACH debit
Both ACH credits and debits use the same network but work in opposite directions:
- ACH credit – The payer pushes money to the recipient (e.g., payroll direct deposit).
- ACH debit – The recipient pulls money from the payer’s account (e.g., automatic bill payment).
Understanding the difference is especially important when setting up vendor payments or recurring transactions.
Common uses of ACH credit for businesses
Small businesses often use ACH credits for:
- Employee payroll – Direct deposit of wages and bonuses
- Vendor payments – Paying suppliers or service providers
- Reimbursements – Sending funds to employees for expenses
- Government payments – Issuing or receiving tax refunds, stimulus checks, or benefits
ACH credit is widely accepted and doesn’t require physical checks or third-party services.
Benefits of using ACH credits
There are many reasons to use ACH credits over other payment methods:
- Convenience – No need to write or mail checks
- Speed – Payments are usually delivered in 1–2 business days
- Security – Fewer risks than mailing paper checks
- Cost-effectiveness – Typically lower fees than wire transfers or card payments
- Automation – Easily scheduled for recurring payments like payroll
When you’re managing a team, automating payments through ACH can free up time and reduce human error.
How to set up ACH credits
To start sending ACH credits from your business:
- Open a business checking account – You’ll need one that supports ACH transfers.
- Collect bank details from your payees – Routing and account numbers.
- Choose a payment provider – Use your bank’s ACH service or a payroll provider like Homebase.
- Set payment permissions – Ensure employees or vendors authorize receiving ACH payments.
- Schedule payments – Enter details, approve, and send.
Make sure you follow data security best practices when handling banking information.
How Homebase helps simplify ACH payroll
Paying employees with ACH credit is fast, easy, and more secure when it’s automated. Homebase payroll takes the stress out of payday by handling direct deposits, calculating taxes, and ensuring compliance with federal and state laws.
With Homebase payroll, you can:
- Pay employees via ACH direct deposit
- Set up automatic payment schedules
- Handle tax withholdings and filings automatically
- Track wage history, hours worked, and pay stubs
Explore Homebase payroll to simplify ACH payroll, reduce manual work, and give your team the reliable payments they deserve.