Let Truly Financial Help You Make the Right Choice
For many small business owners, managing monthly payments is a headache that can be exhausting and frustrating. When it comes to transferring money, there are a lot of different options to choose from, but not every option is going to be the right one for every situation.
This article by Truly Financial aims to help you make informed choices on all your options. Let’s begin by discussing the main differences between ACH and wire transfers.
Understanding the Differences Between ACH and Wire Transfers
ACH:
ACH (Automated Clearing House) is an electronic, bank-to-bank transfer method that typically takes three to four business days to complete.
Depending on your financial institution, the costs vary for ACH transfers. They could be charged in a variety of ways, such as:
- Per transaction fee
- Flat fees
- Monthly coverage fees
- Reversal/Return fees for incomplete or failed transactions
Wire Transfers:
Wire transfers are another form of a bank-to-bank transfer, which can be done between individuals or businesses and requires no physical exchange of checks.
However, this is not to be confused with money transfers, which are done by third-party service providers instead of banks.
Wire transfers are much faster (and even safer) to send than ACH payments, but they come at a much higher cost per transaction.
Sending Money in the Way that Makes the Most Sense for YOU
Because they are similar, many business owners may assume transfers are interchangeable, but that’s not the case.
There are a number of scenarios that need to be considered when you are deciding between ACH vs wire transfers, so you can ensure that your transfer is processed quickly, safely and reliably.
Before choosing between ACH or wire transfers, ask yourself these five important questions:
1. Where are You Sending the Money?
Are you sending your transfer domestically or internationally? This has a huge impact on which you should choose.
Wire transfers are often better for international payments, because they’re much faster and more secure. However, this means higher costs.
ACH is usually a good choice for domestic transfers, because it’s much more affordable than using Fedwire for wiring payments within the US.
International ACH payments, or deposits into the recipients’ bank account, usually are not provided by traditional banks. However, you can use a digital bank to pay via international ACH or direct deposit.
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2. Who’s Receiving the Funds?
Vendors and employees benefit most from wire transfers, because of fast processing and extra security features.
However, it does come at an extra cost, which is oftentimes payable by the sender and the recipient. Modern banking services, like Truly Financial, waive most wire transfer fees.
On the other hand, ACH tends to be a better option for customers, because it removes responsibility from them to process the transaction (no checks to deposit for refunds or rebates).
If you are looking to build strong brand loyalty, take the recipient of your transfer into consideration before making your choice.
3. When Does the Transfer Need to Be There?
For a domestic payment, does the transfer need to be there within the next few hours? If so, you are going to want to choose a wire transfer.
If paying a vendor internationally, processing times for wire transfer can be unpredictable, as it relies upon multiple banks to process the payment in a timely fashion.
Are you paying a vendor that will happily accept payments within a range of dates? You can probably save your business a few dollars by choosing ACH.
Just be sure to think about when your transfer needs to arrive. You don’t want to alienate your vendors or employees by breaking your payment commitments.
4. How Much Do You Want to Spend on the Transfer?
For small businesses that are running on minimal working capital, this can be an incredibly frustrating monthly obstacle to overcome.
There are always going to be some kinds of fees associated with regular payments, regardless of the transfer method you choose.
The challenge lies in trying to manage costs, while also ensuring the recipients are happy with the timeliness of their payments.
First and foremost, you need to make the right choices for your business. It is impossible to achieve sustainable growth, if you are wasting money on inefficient payments in/out every month.
After all, even receiving a wire payment ends up costing you in traditional banking.
New-age banking services like Truly Financial remove the stress of bank fees and unpredictability. You pay zero fees for receiving Wire and ACH payments, and zero/low fees for sending by Fedwire or International wire.
5. How Often are You Sending Transfers?
Frequency is another major factor to consider when sending money to people in your business network.
Are you sending a few single, sizable transactions each month, or do you need to process hundreds or even thousands of payments? The payment method you choose could end up costing or saving your business a lot of money.
Choosing the right kind of financial institution to process these transactions also makes a huge difference.
If you are only sending a few transfers per month, you may want an account with a per-transaction cost. If you are sending a lot of transfers, you may want an account that gives you unlimited transactions for a fixed cost.
Only you can decide what’s best for your business, but remember—every dollar you save on the cost of doing business (like transfer fees) is another dollar you can reallocate somewhere else.
Flexible Transfer Options – A Custom Solution For Any Small Business
Truly Financial makes sending money quick and painless with ACH, wire transfer, and EFT options available for your convenience.
Receiving payments on Truly Financial is always free. You can auto-deposit funds from your invoicing software, Stripe or other payment gateway (Amazon, etc.), without any worry.
This is just one of the ways that Truly Financial is helping business owners build their companies, earn to their potential, and grow without boundaries.