What is an ACH routing number and where can I find it?

ACH payments are essential for many businesses, and the routing number is one of their most vital components. But what is an ACH routing number? 

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An ACH routing number, or ACH number, is a nine-digit code that directs the ACH network to the correct bank for processing electronic funds transfers (EFTs). These numbers are crucial for processing payroll and paying vendors. 

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By knowing how ACH routing numbers work, you can prevent payment delays and errors that might impact your business.

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Let’s take a closer look at what an ACH routing number is and explore its significance in the ACH payment process.

What is an ACH routing number?

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Each ACH routing number is unique to a specific financial institution. These nine-digit codes are designed to handle large volumes of routine business payments, such as employee salaries or recurring vendor invoices.

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It’s important to note that larger banks often have multiple ACH routing numbers due to geographic and service-related factors, such as the account's location or the type of transaction being processed. You’ll need to verify the correct routing number for your specific payment to ensure your electronic transactions will be processed correctly. 

Why do ACH routing numbers have nine digits?

Each of the nine digits in an ACH routing number serves a specific purpose. Let’s break it down into three sets of numbers and clarify the purpose of each set:

• Federal Reserve routing symbol (first four digits): The first two digits indicate the Federal Reserve Bank district where the institution is located, while the next two digits identify the specific processing center within that district. This helps route transactions through the appropriate Federal Reserve Bank.
• Financial institution identifier (next four digits): The next four digits uniquely identify the specific financial institution. This ensures that payments are directed to the right bank or credit union within the ACH network.
• Check digit (last digit): The ninth digit is a checksum—a digit calculated using the first eight digits in a mathematical formula to ensure that the routing number is correct.

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ACH routing numbers are easier to understand once you know the purpose and importance of each set of digits. 

How to find and verify your ACH routing number

We’ve covered the meaning and significance of ACH routing numbers, but where are they? Here are a few ways you can locate your ACH number:

1. Bank statements: Many banks include ACH routing numbers on monthly statements, especially when referencing electronic transactions like payroll deposits or recurring bill payments 
2. Online banking: Log in to your bank account online and access your account details. Most platforms display the ACH routing number in a dedicated section.
3. Customer service: Contact your bank's customer service if you can’t find your ACH routing number using the above methods. After verifying your identity, they can provide you with the correct routing number.

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Note that the routing number on your company’s paper checks may differ from your ACH routing number. Knowing how to find the correct ACH routing number is important so you can verify it.

Verifying ACH routing numbers

Always verify you’re using the correct ACH routing numbers before initiating payments. Incorrect routing numbers can result in:

• Returned payments
• Additional fees
• Compliance issues with Nacha regulations
• Fraudulent transactions

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As you can see, knowing where to find ACH routing numbers and ensuring that you always verify them can protect your business from some potentially serious problems. 

ACH routing numbers vs. other routing numbers

While it’s important to understand ACH routing numbers, your accounts payable (AP) team will most likely need to deal with other types of routing numbers, too. 

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With that in mind, let’s explore the key differences between ACH routing numbers, wire transfer routing numbers, and American Bankers Association (ABA) routing numbers.

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You’ll likely use ACH payments and routing numbers for transactions like direct deposit and recurring bill payments. Wire transfer is also a bank-to-bank transaction but requires a fee and is more commonly used for larger transactions. ABA routing numbers, meanwhile, will generally come into play when dealing with paper checks.

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All three of these payment forms may have different routing numbers even within the same bank. You’ll always want to confirm that you’re using the correct routing number for the type of transaction you’re making. 

Common errors businesses make with ACH routing numbers

There are several ways your business could make mistakes with ACH routing numbers. Understanding what they are and how they can happen will make it easier to avoid those mistakes as well as their repercussions, like delayed, failed, or misdirected payments. 

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Let’s look at some of the most common mistakes businesses make with ACH numbers:

1. Entering incorrect routing numbers

One of the most common mistakes in an ACH payment transaction is inputting an incorrect ACH routing number due to typographical errors or misreading the number from a document. This sends payments to the wrong financial institution, causing delays or failed transactions.

2. Using the wrong routing number for the transaction type

ACH routing numbers are assigned for specific electronic payment purposes, and using the wrong one can cause transaction errors. For example, using a domestic ACH routing number for an international payment will cause the transaction to fail, as overseas transfers require SWIFT codes.

3. Using outdated routing numbers

Routing numbers can change due to bank mergers, acquisitions, or operational updates, but businesses often fail to update their records. This results in payments being sent to invalid or outdated routing numbers, causing returns and delays and impacting cash flow.

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4. Misinterpreting numbers on documents

The numbers printed on bank documentation can be confusing, and businesses sometimes mistake account numbers or other identifiers for ACH routing numbers. This leads to incorrect data entry, resulting in rejected or misdirected transactions.

5. Failing to verify routing numbers

Skipping the step of verifying ACH routing numbers before initiating transactions is a common error that increases the likelihood of failed transactions.

6. Skipping authorization from clients or vendors

Another frequent mistake is using ACH routing numbers without proper client, employee, or vendor authorization. This can lead to disputes, legal issues, and loss of stakeholder trust.

7. Neglecting security for ACH routing numbers

Some businesses fail to implement adequate security measures for handling ACH routing numbers. This exposes sensitive information to unauthorized access and increases the risk of fraud, data breaches, and financial losses.

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Understanding what an ACH number is and using it correctly is crucial for efficient ACH payments. By staying compliant with Nacha regulations and using automated verification tools, you can reduce errors and delays in your payment processes.

Simplify your ACH payments with Ramp

Understanding what ACH routing numbers are, what their purpose is, and how to find and verify them is crucial to avoiding common ACH payment mistakes like missed, delayed, or even misdirected payments.

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Repeatedly tracking down the same routing numbers and manually filling out forms can slow your team down. But with automated AP software like Ramp, you can automate your entire AP process so you can simply scan or upload invoices, receipts, vendor onboarding documents, purchase orders, and more. 

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Other ways Ramp can save your team time and money include automated approval workflows, 2-way and 3-way invoice matching, and complete visibility into the payment cycle across all payment methods and vendors.

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Want to see everything Ramp Bill Pay can do for your AP team? Try a demo.