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What is an ACH withdrawal?

What is an ACH withdrawal?
ACH withdrawals are becoming more and more commonly used for payroll, direct bank account transactions, and recurring payments.

Paper checks and cash transactions are slowly becoming less and less popular, particularly for business payments. Sending checks through the mail is less secure than more modern digital counterparts and can be less reliable. Due to their many advantages, digital payment methods have become much more prevalent, such as wire transfers and credit card or debit card payments. While both of these methods are excellent for specific transactions, another option called ACH transactions or withdrawals is becoming more and more commonly used for payroll, direct bank account transactions, and recurring payments.

What is an ACH withdrawal?

ACH withdrawals are a type of EFT payment where money is pulled from a bank account using the Automated Clearing House Network (ACH network). ACH processes are also often referred to as direct payments, direct deposits, or e-checks. The ACH method of money transfer is seen commonly within recurring bill payments such as mortgages or utilities. It also is used by the government for tax refunds and Social Security payments.

While ACH operators (the electronics payments network and the United States Federal Reserve) run the ACH network, they do not manage it. The National Automated Clearing House Association (Nacha) is a nonprofit that creates and enforces the rules for the ACH. Nacha ensures that all payments running through the ACH follow strict standards, and it provides overall governance of the ACH network including any charges or withdrawals that run through it.

How does ACH withdrawal work?

To make an ACH debit transaction or withdrawal:

  • The initiating party provides the bank account information (such as the checking account number and routing number) for their account and the recipient's account.
  • A request gets sent to the originating depository financial institution (ODFI) in all ACH transactions.
  • The ODFI confirms the electronic payment information and then passes it along to the recipient's bank, referred to as the receiving depository financial institution (RDFI).

In the case of an ACH withdrawal, a party will authorize another group to pull funds from their account, most often in recurring payments like utilities or rent.

How do ACH and direct deposit work?

ACH direct deposits help companies or individuals send money out rather than making a withdrawal. You will often see ACH direct deposits in situations such as payroll ACH processing for employees or B2B payments to vendors or suppliers. Depending on who starts a transfer, your ACH transaction will be either a debit or credit.

ACH credit

When the person who starts an ACH transaction is looking to pay another party or biller, they begin an ACH Credit transaction. You can visualize these types of ACH transactions as money being pushed from the initiator's bank account to the recipient's. An example of an ACH credit would be payroll payments from a company to an employee.

ACH debit

Opposite of an ACH credit, ACH debits occur when the party who starts the transaction looks to pull money from another party's account. An example of an ACH debit would be a utility company pulling money from a homeowner's bank account for their monthly payment.

How businesses leverage ACH withdrawals

There are certainly more benefits for companies than drawbacks when it comes to ACH withdrawals. From speedy transactions to saved money in ease of processing and fees, it isn't a surprise that businesses are turning to ACH transactions.

Faster payments

ACH transactions often only take a few business days to clear, often only 2-5 days, and sometimes even by the next business day after the transaction. Quick payments and withdrawals mean positive relationships with vendors and fewer late fees due to checks getting held up in the mail. Learn more about the benefits of ACH payments over check payments.

Automation potential

ACH withdrawals can be automated, meaning clients can gather consistent payments without consistent approval processes and manual payment processing. Automation is also possible for companies when they pay employees or vendors, overall cutting down on processing time for your accounting team.

Lower fees & administrative costs

With fees of only $0.20-$1.50, the price of ACH transactions is much lower than many other money transfer methods. The ease of use also means that less employee time gets used processing the payments, and there is less time wasted in the administrative processes.

How to make an ACH withdrawal

To make an ACH withdrawal, you will have to first collect your bank account number and routing number, as well as the opposing party's information. Once you have that information collected and have received approval for the transaction from both ends of the payment, you can start processing your payment through your financial institution or another ACH provider of your choice.

Make easier ACH payments with Routable

Are you looking to start making ACH withdrawals for your company? Automated payment solutions like Routable can help make the entire process even more accessible. Our program has features such as same-day ACH transactions, addenda records, and intensive tracking, helping your company manage payments regardless of your size or needs. Routable can help you automate your accounts payable and accounts receivable to help save your financial department both time and money.

API & integrations

With its sophisticated API, Routable allows you to do bulk processing easily. Whether ACH withdrawals or other transactions, Routable helps you make AR work your way, whether emailing invoices, scanning them, or uploading batch files. By giving your team the tools to streamline their API workflows, you can efficiently process one payment or thousands.

Automated accounts receivable

By automatically routing your invoices, collecting revenue, and updating your payment records, Routable can help save time for your team and get you paid faster. By allowing you to make online payments with real-time notifications, you can take advantage of ACH transactions and other digital transaction methods. Your team will spend less time on invoicing and more time focusing on what matters most.

Easy accounts payable

Routable helps your accounts payable keep track of your cash flow and expenses and can ensure through automation that all invoices get paid before their due dates. Eliminate the time your team spends on manual data entry, and simplify your AP processes.

Frequently asked questions about ACH withdrawals

ACH withdrawals can be confusing. Here are some frequently asked questions about how they work:

How long does an ACH withdrawal take?

ACH withdrawals can be same-day or take 2-5 day son average. Routable supports same-day ACH transactions. Learn more about Routable's ACH payment delivery options here.

Is ACH a direct deposit?

Yes, the term direct deposit is often used interchangeably with ACH transactions. Learn more about ACH direct deposits here.

What happens if an ACH transfer fails?

If an ACH transfer fails, the process will be reversed, and you will receive a notification of the status change.


By implementing Routable and its automation features, customers have seen 40% saved on bill payment and mass payout costs, as well as a 70% reduction in manual, repetitive tasks for their teams. As you consider moving to ACH payments, Routable can help make the transition smooth by integrating directly into your current workflow and software, helping make the move seamless and easy.

To learn more about how Routable can help you with your ACH withdrawals and payments, contact us for a demo.

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