Affects of An ACH Delay

An ACH (automated clearing house) delay may not adversely affect your business. If your business is considered high risk, and a provider is still willing to give you a merchant account, you may want to consider the offer.

Why are ACH delays necessary?

An ACH delay is a temporary hold on an electronic deposit from the acquiring bank to your direct deposit account (DDA). An ACH delay is imposed on new merchant accounts as a way of lower the risk that is associated with the new account. You may be asked to agree to an ACH delay if:

• You have bad personal credit
• Your merchant account is seen as high risk
• You are declaring a large average ticket
• You are asking for a large processing volume

The list above is composed of only a few reasons why a provider may ask for an ACH delay. If you are asked to agree to an ACH delay prior to having your merchant account approved, you should inquire as to why the delay is needed. The reason for the delay may be something that you can reconcile.

Affects of an ACH delay on your business

An ACH delay sounds a lot worse than it really is. Most businesses may not even notice the extra time that it takes for their deposits to be made. Many people refuse to sign an ACH delay because they take the need for one as a personal insult. If you are asked for an ACH delay prior to having your merchant account approved, leave your feelings aside and think about the affects an ACH delay will have on your business.

Deposits are Still Consistent
Any business that has a constant stream of revenue from sales will hardly notice an ACH delay once they begin to process. Deposits from the acquiring bank will consistently be made a few days after a batch is cleared. It will only be in the first few days that you are processing where you will notice that there have been no deposits. After that deposits from previous days sales will be made on a consistent basis.

NET Terms Alleviate ACH Delay Affects
Most businesses do not have a need for deposits to be made within 24-48 hours. Sure, it's nice to have the money from sales quickly, but it is usually not necessary.

For example:
most product based businesses (online and physical retailers) are given NET terms by their suppliers that makes it possible for them to pay for merchandise up to 30 days after it is received. Even with the longest of ACH delays, a business with NET-30 terms would be able to pay for product on time.

An ACH delay will only be a factor for businesses that run a tight cash flow.
Any businesses that have a tight cash flow should avoid an ACH delay, as the delay will adversely affect business operation.

For example:
construction businesses or home repair businesses usually need to purchase material to complete jobs. They would not be able to wait additional time for the deposit to be made from the merchant bank, before they are able to purchase material and start a job.

Every business is different, but most new businesses will not have a problem getting started with a merchant account that has an ACH delay. Once you get to the point in the application process where a credit card processor would ask for an ACH delay; you're almost approved. Starting the whole ordeal over again by applying with another processor is no guarantee that you won't get asked for a delay again, and this will only waste valuable time.

Below are a couple of quick facts to keep in mind about ACH delays as you consider whether or not a delay will hurt your business.

• ACH delays are not permanent - ACH delays usually last for a year, and they can sometimes be removed sooner upon request.
• A merchant account is usually approved quickly once a merchant agrees to an ACH delay.