ACH

Automated Clearing House — U.S. interbank batch payment network.

Definition

ACH (Automated Clearing House) is the U.S. interbank network that processes electronic payments in batches rather than in real time. Payroll direct deposits, recurring bill payments, and consumer-to-consumer transfers all flow through ACH. Payroll providers submit ACH credit files one to two business days before payday so funds are available in the employee's account by the morning of payday. ACH is administered by Nacha (the National Automated Clearing House Association) and operates on weekdays only — no settlement on weekends or federal holidays, which is why payday usually advances to Friday when it would otherwise fall on a Saturday or Sunday.

Example

An employer initiates an ACH credit file on Wednesday for Friday payday deposits.

Related terms

• Pay period — The recurring window of time covered by a single paycheck.
• Pay frequency — How often paychecks are issued.
• Payday — The calendar day wages are deposited.
• In arrears — Wages paid after the pay period ends.
• Biweekly — Every other week — 26 paychecks per year.
• Semimonthly — Twice per month on fixed dates — 24 paychecks per year.

See also

• Pay schedule calculator — convert salary to per-paycheck amount
• Pay frequencies primer — weekly, biweekly, semimonthly, monthly
• Frequently asked questions