June 30, 2025

How to pay vendors via ACH in 7 simple steps

Paying all your invoices on time is an important part of maintaining strong vendor relationships. Fortunately, you can accomplish that and save your company considerable time and money at the same time.

Paying vendors via ACH is faster, more secure, and more cost-effective than checks or wire transfers. ACH payments allow for direct bank-to-bank transfers, cutting down on manual processes and ensuring your vendors get paid on time.

Let’s break down how ACH payments work, how to set them up for vendor payments, and how to troubleshoot common challenges.

What is an ACH transfer?

ACH transfers are electronic funds transfers made through the Automated Clearing House network. They’re regulated by Nacha (formerly the National Automated Clearing House Association), the organization that sets compliance and security standards for ACH transactions.

Though the terms are used interchangeably, there's a subtle difference between ACH transfers and ACH payments:

  • ACH transfer is the broader, more technical term that refers to any electronic movement of funds between bank accounts using the ACH network. This includes both money going out of your account and money coming into your account.
  • ACH payment typically refers more specifically to sending money out of your account to pay someone else, such as a vendor. It's essentially a subset of ACH transfers focused on payment.

Instead of sending paper checks or dealing with high wire transfer fees, businesses can use ACH payments to pay vendors directly, saving money and reducing processing time.

How ACH payments work

ACH transactions process in batches, meaning payments don’t move in real time. When you initiate an ACH payment, your bank sends the request through the ACH network. The vendor’s bank then processes the deposit, typically within 1–3 business days.

Unlike paper checks that require physical handling, ACH moves money digitally between bank accounts. Wire transfers happen instantly but cost more, while credit card payments involve merchant fees and create debt rather than direct bank-to-bank movement.

ACH offers a reliable, low-cost middle ground for electronic payments like direct deposits and bill payments.

ACH vs. wire transfers

When it comes to paying vendors, ACH payments are often compared to wire transfers—and, in some cases, the two are mistakenly conflated. In reality, they have significant differences.

ACH transfers take 1–3 days and are highly cost-effective, making them ideal for routine payments such as bills and payroll. Wire transfers complete within hours but cost $25–$35 domestically or $35–$50 internationally. For that reason, they're better for urgent, high-value transactions such as real estate purchases or emergency payments.

Here's a comparison of their basic features:

Feature

ACH payments

Wire transfers

Speed

1–3 business days

Same day/within hours

Cost

$0.20–$1.50

$25–$50

Reversibility

Can be reversed/disputed

Generally irreversible

Processing

Batch processing

Individual processing

Best for

Bills, payroll, routine payments

Urgent, high-value transactions

Security

High (encrypted, regulated)

Very high (immediate settlement)

Limits

Often lower daily/monthly limits

Higher transaction limits

Choose ACH for regular vendor payments where timing isn't critical, and reserve wire transfers for time-sensitive situations where the higher cost is justified by urgency.

Types of ACH payments

ACH payments come in two main forms: direct deposit and direct payment. For vendor payments, you'll typically use direct payment, which pushes money from your account to the vendor’s.

Direct deposit vs. direct payment

These two ACH types differ by who receives the money and who initiates the transaction. Each serves specific business functions and payment scenarios:

  • Direct deposit: Moves money into an account, such as employee paychecks, tax refunds, or government benefits. The recipient receives funds automatically without taking action.
  • Direct payment: Moves money out of an account to pay bills or vendors. Examples include utility payments, supplier invoices, or subscription fees.

Direct deposits streamline incoming payments while direct payments simplify outgoing transactions. Most businesses use both types to manage their complete payment workflow.

ACH debit vs. ACH credit

Within ACH payments, you'll encounter terms like debit and credit that affect how transactions are processed. The key difference lies in who initiates the transaction. This determines authorization requirements and helps businesses choose the appropriate payment method:

  • ACH debit: Pulls money from an account, like when a utility company withdraws your monthly payment. The recipient initiates the transaction.
  • ACH credit: Pushes money to another account, such as when you send payment to a vendor. The sender initiates and controls the transaction.

Understanding ACH debit vs. credit helps businesses select the right method based on who needs control over payment timing and authorization.

How long do ACH payments take to process?

ACH payment timing varies based on processing options, bank schedules, and transaction types. Planning ahead helps ensure your vendor payments arrive when expected.

When you pay a vendor electronically using a standard ACH payment, it will typically take 1–3 business days to complete. The exact timing depends on when you submit the payment and your bank's processing schedule.

Same-day ACH processing is available for urgent payments, though it costs more than standard processing. Most banks charge $1–$5 for same-day service.

Several factors can affect processing speed beyond your control. Weekends and federal bank holidays pause ACH processing, potentially extending delivery times. In addition, payments submitted after your bank's daily cutoff time may not process until the next business day.

Typical ACH processing timelines and fees are:

  • Standard ACH: 1–3 business days ($0.20–$1.50)
  • Same-day ACH: Within hours on same business day ($1–$5)
  • Next-day ACH: 1 business day (varies by bank, $1–$3)

Plan your ACH payments with processing times in mind to avoid late fees, maintain good vendor relationships, and keep costs low.

Why businesses should use ACH for vendor payments

Here’s why switching to ACH is an excellent choice for paying your vendors electronically:

  • Lower transaction costs: ACH payments cost between $0.20–$1.50 per transaction, compared to $25–$50 for wire transfers. Switching to ACH can help your business cut costs and smooth out cash flow.
  • Faster processing: ACH payments settle in 1–3 business days, while same-day or instant ACH can clear payments within hours. This ensures vendors receive funds on time and helps your business maintain strong supplier relationships.
  • Enhanced security: ACH payments reduce the risk of check fraud, theft, and forgery. Transactions are encrypted and comply with Nacha security standards, with additional safeguards like multi-factor authentication and fraud detection tools.
  • Automated, efficient payments: ACH transfers automate recurring transactions, reducing manual work and the administrative burden on your team
  • Reliable tracking and reporting: ACH payments generate electronic records that make it easy to track transactions, confirm payment status, and reconcile financial statements. Many banks offer detailed ACH reporting, helping to reduce errors and disputes.

It can be easy to fall into a pattern of doing things the way you always have in your business. But when a simple change can bring as many benefits to your organization as ACH vendor payments can, it’s a switch worth making.

All payments in one place? Check.

Handle all domestic and global vendor payments on a single platform—by check, card, ACH, or international wire.

abstract graphic of calendar and a schedule button

How to pay vendors via ACH

ACH payments can provide predictability and security for your business, but setting up ACH correctly is key to avoiding delays or failed transactions. Paying your vendors via ACH can reduce costs, accelerate processing, and improve security. To start paying vendors via ACH payments, all you need to do is follow these 7 basic steps.

Step 1: Choose an ACH provider

Select a bank or payment processor that supports ACH payments. If you process high volumes of vendor payments, consider an accounts payable (AP) automation platform that integrates with your bank to streamline tracking and approvals.

Before selecting a provider, compare:

  • Fees: Some providers charge ACH fees per transaction, while others offer flat-rate pricing
  • Processing times: Standard ACH takes 1–3 days, while Same-Day ACH (SDA) clears within hours
  • Security features: Look for fraud detection, multi-factor authentication (MFA), and role-based access

Reading ACH provider reviews online could give you an idea of which providers other businesses like yours are happiest with and why.

Step 2: Set up your ACH payment system

Make sure your business bank account supports ACH transfers. Then, enter your account and routing number into your ACH payment system or accounts payable software to enable outgoing payments.

If using an AP platform, connect it with your bank for automated invoice processing and reconciliation.

Step 3: Gather vendor banking details

To pay vendors via ACH, collect the following vendor information:

  • Business name
  • Bank name
  • Bank account number
  • ACH routing number

Be sure to use a secure method to collect this information to prevent any data breaches and to maintain trust with your vendor.

Step 4: Set up and verify the vendor in your payment system

ACH payments can fail due to incorrect bank details. To prevent rejected transactions, validate the vendor’s banking information before processing payments.

Verification methods include:

  • Instant account verification: Confirms account ownership in real time
  • Micro-deposits: Small test deposits let you verify bank details before processing real payments

Now that you have everything set up and verified, you’re ready to start processing your ACH payments.

Step 5: Process ACH payments

Determine whether you need to send one-time or batch payments. If you pay multiple vendors, batch processing allows for more efficient payment scheduling. Next, enter the payment details, verify that everything is correct, and authorize the payment using multi-factor authentication or a digital signature.

If issues arise with completing the transaction, an ACH return code may appear. The code itself can be an indicator of how to resolve the issue. For example, an invalid account number code means you need to double check that you have the correct banking information for your vendor.

Step 6: Submit the payment

Once payment is approved, create an ACH file that includes:

  • Vendor's bank account details
  • Payment amount
  • Processing date

Send the file to your bank or ACH processor, and track payment status to confirm successful transfers. Many banks and AP automation tools offer real-time tracking to help monitor transactions.

Step 7: Notify the vendor and reconcile records

To maintain communication and a healthy vendor relationship, provide notification that your payment has been sent. This also lets the vendor know to expect a deposit so they can follow up should any issues arise.

Enter the payment into your bookkeeping system. This also helps you follow up if necessary, and keeps your records up to date in the event of an audit.

With these straightforward steps, you'll streamline vendor payments and strengthen those relationships while reducing processing fees and enhancing financial security for your business operations.

Common challenges and how to overcome them

Here are some common challenges businesses face when paying vendors via ACH—and strategies for resolving them.

Incorrect or outdated vendor bank details

ACH payments can fail due to incorrect routing or account numbers, causing delays and additional fees. Vendors may also provide outdated banking details or make entry errors.

To prevent failed transactions, use bank account validation tools like instant verification or micro-deposits before processing payments.

Vendor reluctance to accept ACH payments

Some vendors hesitate to switch from checks or credit cards due to habit or security concerns. To encourage ACH adoption, emphasize the faster processing times, lower fees, and reduced fraud risk. A simple digital onboarding process can also make the transition easier.

Fraud and unauthorized transactions

ACH payments can be vulnerable to payables fraud, phishing attacks, and account takeovers if banking details are compromised. To protect payments:

  • Use ACH Positive Pay: Sign up for this fraud prevention banking service that allows businesses to review and approve transactions before they clear
  • Use secure portals: Use dedicated platforms to collect and store vendor banking details safely
  • Restrict access: Limit ACH access to authorized personnel only
  • Use multi-factor authentication: Enable dual approval workflows for all ACH transactions, requiring two authorized users to verify payment details before processing
  • Monitor accounts: Monitor account activity regularly and set up automated alerts for unusual transaction patterns, large amounts, or payments to new vendors
  • Make vendor verification calls: Conduct periodic calls using independently sourced contact information to confirm banking details before processing payments, especially for new vendors or account changes

To further streamline ACH vendor payments, consider using an AP automation platform. Automated approval workflows speed up processing, while real-time tracking provides visibility into payment status. Integrated bill payment tools can also help manage multiple vendor transactions in one place.

Automate your vendor payments with ACH and Ramp

Making the switch to ACH payments is a simple way to save your business time and money, improve vendor relationships with timely payments, and prevent fraud.

Ramp Bill Pay, our AP automation software, streamlines the payment process by integrating ACH or any other payment type with your AP workflows. Your AP team can reclaim the time spent on manual busywork and gain real-time visibility into every step of the payment cycle.

Ramp Bill Pay provides:

  • Customizable approval workflows that keep invoices moving quickly toward payment
  • Invoice processing automation and one-click syncing with your ERP
  • Automated 2-way and 3-way matching to catch errors quickly and easily before you pay

How much time and money could your AP team save by processing ACH payments on Ramp? Try Ramp Bill Pay and see for yourself.

Try Ramp for free

This post includes general information about ACH payments. For help with ACH functionality specific to Ramp, visit Ramp Support for more details.

Share with
Ashley NguyenContent Strategist, Ramp
Ashley is a Content Strategist and Marketer at Ramp. Prior to Ramp, she led B2C growth strategies at Search Nurture, Roku, and TikTok. Ashley holds a B.S. in Managerial Economics from the University of California, Davis.
Ramp is dedicated to helping businesses of all sizes make informed decisions. We adhere to strict editorial guidelines to ensure that our content meets and maintains our high standards.

We’ve simplified our workflows while improving accuracy, and we are faster in closing with the help of automation. We could not have achieved this without the solutions Ramp brought to the table.

Kaustubh Khandelwal

VP of Finance, Poshmark

Poshmark

Our previous bill pay process probably took a good 10 hours per AP batch. Now it just takes a couple of minutes between getting an invoice entered, approved, and processed.

Jason Hershey

VP of Finance and Accounting, Hospital Association of Oregon

Hospital Association of Oregon

When looking for a procure-to-pay solution we wanted to make everyone’s life easier. We wanted a one-click type of solution, and that’s what we’ve achieved with Ramp.

Mandy Mobley

Finance Invoice & Expense Coordinator, Crossings Community Church

Crossings Community Church

We no longer have to comb through expense records for the whole month — having everything in one spot has been really convenient. Ramp's made things more streamlined and easy for us to stay on top of. It's been a night and day difference.

Fahem Islam

Accounting Associate, Snapdocs

Snapdocs

It's great to be able to park our operating cash in the Ramp Business Account where it earns an actual return and then also pay the bills from that account to maximize float.

Mike Rizzo

Accounting Manager, MakeStickers

Makestickers

The practice managers love Ramp, it allows them to keep some agency for paying practice expenses. They like that they can instantaneously attach receipts at the time of transaction, and that they can text back-and-forth with the automated system. We've gotten a lot of good feedback from users.

Greg Finn

Director of FP&A, Align ENTA

Align ENTA

The reason I've been such a super fan of Ramp is the product velocity. Not only is it incredibly beneficial to the user, it’s also something that gives me confidence in your ability to continue to pull away from other products.

Tyler Bliha

CEO, Abode

Abode