Create ACH Authorization Form
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    An ACH authorization template is an agreement that outlines bank-to-bank payment terms between a payor and payee using the ACH network. For your business to accept ACH payments, the law requires that you obtain your client’s bank details in a signed ACH authorization template. You can use an ACH payment form for either ACH direct deposit (when a customer is receiving money from a business) or ACH direct payments (when a business or customer is making payments). Get this legal template by Lawrina, fill it out online, and download it in PDF.
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    Template Description

    For your business to accept ACH payments, the law requires that you obtain your client's bank details in a signed ACH authorization form template.

     

    What is an ACH Authorization Form?

    An ACH authorization template is an agreement that outlines bank-to-bank payment terms between a payor and payee using the ACH network. You can get this ACH authorization form template by Lawrina Templates and adapt it to your business.   

    So, how exactly does the process work? An Automated Clearing House (ACH) is an electronic payment system that allows a safe and traceable batch transfer of funds between banks. The National Automated Clearing House Association (NATCHA) governs the ACH network by writing engagement rules and overseeing the conduct of participating banks. 

    The terminologies relevant to the process are: 

    • Originator: (You) The institution requesting payment, also known as the payment processor;
    • Originating Depository Financial Institution (ODFI): (Your bank) The originator’s bank;
    • ACH operator: The clearing house responsible for processing the transaction;
    • Receiver: (Your customer) The one with the obligation to make payment; and
    • Receiving Depository Financial Institution (RDFI): (Your Customers Bank) The receiver’s bank. 

    Here is a simple ACH payment example to help you understand how the process works. Assuming that you own a gym and have convinced your clients to automate their monthly payments, this is how the transaction will unfold: 

    • Ask your bank to activate the direct deposit feature. Once the feature is activated, the bank will give instructions on how to upload an ACH file that enables you to receive ACH payments. 
    • Persuade your customers to complete your blank business ACH authorization form template and sign it.  
    • File the completed ACH template with your bank according to the bank instructions.
    • Once your payment is due, your bank or the ODFI sends a request to the clearing house.
    • The clearing house processes your bank’s request and sends it to the customer’s bank or the RDFI. 
    • Your customer’s bank confirms the client's information and that they have enough money to settle the bill. 
    • Once everything checks out, your customer's bank allows your bank to pull the funds into your account. 

    One thing to note is that financial institutions process information in batches and not in real-time. Therefore, your bank will store ACH instructions throughout the day, group them with other similar transactions, and transmit them to the clearing house. The clearing house then sorts the batch of ACH transactions and sends them to the appropriate receiving banks. 

     

    When Should an ACH Authorization Agreement Be Used?

    It’s finally time to retire paper checks. 

    Your clients need the convenience of affordably automating recurring payments without making trips to the bank to deposit paper checks. Leverage ACH payments, a cost-effective way of moving money between US-based accounts. 

    You can use an ACH payment ach form template for either ACH direct deposit (when a customer is receiving money from a business) or ACH direct payments (when a business or customer is making payments). 

    Examples of ACH direct deposit payments include:

    • Direct deposit from an employer (paychecks);
    • Government benefits;
    • Tax refunds; 
    • Interest payments; and
    • Receiving payments for the sale of goods.

    Examples of when ACH is appropriate for direct payments are:

    • Paying a recurring bill directly from your bank account, such as memberships fees or monthly subscriptions;
    • Paying for a product or purchase you make repeatedly;
    • Installment payments for loans or tuition; and 
    • Regular charity donations.

    With ACH transfers, you no longer have to wait for “checks to clear” once payments are due. Depending on the direction of the transaction, once the receiver gets the information and everything checks out, the banks settle debits in a single day and credits within one to two days. 

    It is crucial to distinguish ACH authorization form templates from credit card authorization forms. ACH forms permit a direct charge to a bank account, while credit card forms permit a credit card charge. 

    Further, ACH payment authorization form pdf-based transfers differ from wire transfers. While both offer the convenience of sending money electronically, most banks charge for wire transfers but process ACH payments for free. Additionally, for an ACH transfer, sufficient funds must be in the receiver's account; otherwise, the bank will charge them an insufficient funds penalty. But since wire transfers require an upfront payment of the money to the bank, there is no danger of being charged a fee. 


     

    What Should Be Included In AN ACH Authorization Form?

    Forms differ according to the nature of the business or preference. Some sections to include in a standard ACH authorization form sample are the following:

    • Originator's name and contact information

    The contract should contain your business name, contact information, telephone number, email, and physical address. 

    • Receiver's name and contact information

    Provide an area where your client will indicate their name and contact information, such as email and physical address.

    • Payment details

    The payment details are the backbone of your ACH authorization agreement. 

    Payment details include the amount, frequency, and date your bank should debit the client’s account. Provide a section for the client to indicate the number of installments. The number of installments will be the times your bank charges their account at the due date.  

    • Authorization Statement

    The authorization statement should authorize your company to make ACH debits on the client's account. 

    • Receivers/payor’s bank details

    The client should also provide their banking information, including their bank institution's name, account name and number, routing number, and an indication if it is a savings or checking account. 

    • Recourse statement 

    The recourse statement is a general term in the agreement that articulates how the client can cancel the agreement and the notice period required before the cancellation takes effect. 

    • Date of agreement and signature 

    Ask the client to confirm that the information in the ACH paperwork template is correct and accurate by providing their name, signature, and date. 

     

    How To Fill Out ACH Authorization Form: Easy Steps

    Have a printable ACH agreement form in pdf on Lawrina. You can find an example template online or hire an attorney to write one for you. Below is how you fill out the form.

     

    Fill out all the necessary information

    Once you download a blank ACH information form, ask the client to fill out the variable details, such as the names, contact information, and bank details. The templates are simple, and your client should be able to fill out one, or you may opt to guide them through the process.

     

    Provide payment details information

    Give the receiver the relevant payment details, including the amount, frequency, and date when the payment is due. Ensure the receiver understands they should have the money in the account by the due date to avoid paying the penalty for insufficient funds.

     

    Print out copies

    Have the client confirm that the information provided is accurate and print it as is. Upon their confirmation, please print out the required copies and ask them to sign their names and indicate the date. 

    Keep the original and give the client a copy of the agreement. The law requires businesses to maintain their copy of the ACH agreement for two years after the date of the last payment.
     

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