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In the modern world of finance, the way businesses transfer funds can be as crucial as the products or services they provide. For many small business owners, finance managers, and freelancers, the age-old question of whether to use check or Automated Clearing House (ACH) payments is one that directly impacts their daily operations. This instructional guide is designed to demystify the complexities of these two payment methods and help you determine which one is best suited to your financial management needs.


Understanding the ins and outs of check and ACH payments can dramatically improve the efficiency and security of your transactional processes. Checks may hold a traditional charm, but ACH payments are leading the charge in terms of convenience and speed. In this guide, we’ll dissect the strengths and weaknesses of each method, allowing you to make an informed decision based on your business's unique requirements.

Definition of Check Payments

A once ubiquitous mode of transaction, checks remain in use due to their tangibility and universality. But what exactly are check payments and why do they persist?

What is a Check Payment?

A check is a written, dated, and signed legal document that directs a bank to pay a specific amount to the bearer. It involves three major parties—the writer, the drawee (bank), and the payee— and must have the necessary funds in the account to honor the payment when presented.

How Does it Work?

When you issue a check, the recipient can deposit it at their own bank. This bank clears the check either by processing the payment through the Federal Reserve or by contacting the check writer's bank to confirm funds. Once cleared, the funds are made available to the payee.

Pros and Cons of Using Checks


Checks are great for recording transactions and providing traceable records. For some clientele, checks might be the preferred or only accepted mode of payment. They also provide a level of security, as the payer has control over when funds are released.


The primary drawback is that checks can be time-consuming. The physical transfer process, including mailing and processing, can take several days. They also carry the risk of non-sufficient funds (NSF) if the check bounces, which can damage relationships and result in fees.

Definition of ACH Payments

On the other hand, ACH payments represent an automated and electronic transfer system that can replace a myriad of payment types.

What is an ACH Payment?

ACH payments move money from one bank account to another with no paper involved. This network handles direct deposits for paychecks, tax refunds, and more, in addition to handling many types of bill payments.

How Does it Work?

ACH payments rely on a network operated by the National Automated Clearing House Association (NACHA). Businesses initiate ACH transfers through their bank or using specialized software. The recipient bank then processes the transaction, making the funds available to the receiver.

Pros and Cons of Using ACH Payments


ACH payments are fast and efficient. They offer reliability and security, with strong encryption and limited manual processing that can introduce errors. They are cost-effective and often carry lower fees than credit card transactions.


Despite being highly secure, ACH payments are not immune to fraud. They are not instantaneous either, as they can take one to three business days to clear. They also require explicit authorization, and the process can be confusing for first-time users.

Key Differences between Check and ACH Payments

Understanding the fundamental differences between these two payment methods is crucial for strategic financial management.

Speed of Processing

Checks can take several days to clear, while ACH payments typically take one to three business days. This speed is a significant advantage for ACH, particularly for recurring or time-sensitive payments.

Security and Fraud Risks

Checks can be lost, stolen, or faked, with little recourse once the check has been cashed. ACH payments are electronic, which means they're not susceptible to the same physical risks as checks, but still vulnerable to cyber threats.

Cost and Convenience

The handling and processing fees for checks can be higher than for ACH payments. ACH is also more convenient for making and receiving payments, without the need for physical documents.

Reconciliation and Recordkeeping

Checks offer a paper trail that some businesses appreciate for recordkeeping and reconciliation. ACH transactions are electronic, which in some ways makes tracking and reconciliation easier, though it might be a shift in process for businesses used to paper trails.

Choosing the Right Payment Method

Your decision on whether to use check or ACH payments should be based on your business's specific needs, transaction volume, and industry standards.

Factors to Consider

When deciding between check and ACH payments, consider the following:

  • The payment's urgency and frequency
  • The technological comfort of your clients or suppliers
  • The level of documentation and recordkeeping required
  • The relative costs and risks associated with each method
  • Your business's internal capabilities and resource availability

Best Practices for Utilizing Check or ACH Payments

Regardless of your choice, following these best practices can enhance your payment process:

  • Maintain Clear Communication: Ensure all involved parties are informed about the payment method and any requirements or processes involved.
  • Embrace Automation: Both checks and ACH transfers can be automated, saving time and reducing manual errors. Implement software solutions that streamline your transactional processes.
  • Stay Informed of Bank Policies: Understand the fees and requirements your bank has for processing checks and ACH transactions. Consider shopping around if you're not satisfied with your current arrangements.
  • Prioritize Security: Implement strong security measures for any financial transactions, including regular audits and staff training to recognize and prevent fraud.


The differences between check and ACH payments are significant and can impact your business in substantial ways. By understanding the nuances and considering your unique operational needs, you can confidently select the payment method that aligns with your goals and priorities. It always pays to be informed in the ever-evolving landscape of financial technology and best practices. With this knowledge in hand, you are well-equipped to handle your business's financial matters with efficiency and foresight.

Head of SEO, Ramp

Shaun Hinklein is the Head of SEO at Ramp. Prior to Ramp he built and executed SEO campaigns for Squarespace, Walmart, and Comic Con. Graduating from Rutgers University with a Journalism degree Shaun began his career at MTV News where he became responsible for maintaining Wordpress websites and gaining traffic to them. Learning SEO as a way to achieve that goal, Shaun built dozens of specialized websites for agencies, record labels, and nonprofits before starting his startup career at an incubator in Brooklyn. There he would accept the responsibility of leading SEO at , which would later be acquired for $3.3B by Walmart. When not solving SEO puzzles or building growth campaigns Shaun is scoring music for independent games from his home office in Red Bank, NJ.

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