Business Definition for: Automated Clearing House (ACH)
Automated Clearing House (ACH)
nationwide electronic network that processes debit and credit transactions between participating banks and reduces
float
to one day.
Automated Clearing House (ACH)
computer-based clearing and settlement facility for interchange of electronic debits and credits among financial institutions. ACH entries can be substituted for checks in recurring payments such as mortgages, or in
direct deposit
distribution of federal and corporate benefits payments, including Social Security payments. Since the mid-1970s, the ACH has functioned as a unified payment clearing system consisting of regional clearing house associations owned by financial institutions. The ACH, while used extensively in the early years as a payment system for fixed amount, recurring payments, is being used increasingly as a payments processor for business-to-business trade payments.
See also
Corporate Trade Payment (CTP)
,
net settlement
,
Corporate Trade Exchange (CTX)
,
electronic data interchange (EDI)
,
Cash Concentration & Disbursement (CCD)
Related Terms:
electronic funds transfer used by corporations and government agencies to pay trade creditors through theAutomated Clearing House (ACH)The CTP is less flexible than the newer payment options, such as theCorporate Trade Exchange (CTX)and was phased out in 1996.
in electronic payment systems, settlement of interbank transactions on a net, end-of-day, basis between reserve accounts of banks participating in a clearinghouse. Credit and debit transactions are recorded on the clearinghouse books throughout the business day; final settlement of the net transactions-credits, less debits-occurs when funds due a bank are credited to its reserve account by a Federal Reserve Bank.
electronic funds transfer used by corporations and government agencies to pay trading partners through theAutomated Clearing House (ACH)system. The CTX payment format combines payment information and a variable length record (called an addendum record) with related information, such as invoice numbers, allowing multiple payments to trade creditors in a single transfer of funds.
transmission of business transactions from one company's computer to another company's computer. Transmission is achieved through an electronic communication network that uses translation software to convert transactions from a company's internal format to a standard EDI format. Companies that participate in EDI are referred to as trading partners. Trading partners may be involved in on-line banking, on-line retailing, and electronic funds transfer. There are paperless transactions in an electronic format. In the case of EDI, the auditor should be cognizant of the possible impact on the gathering of evidential matter.
corporate electronic payment used in business to business and intracompany transfers of funds. Vendors, including numerous federal agencies, have used the CCD payment format, an electronic payment record developed by the National Automated Clearing House Association, to make single invoice payments to suppliers. Funds are cleared on an overnight basis through the nationwide Automated Clearing House
Referring Terms:
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