Introduction to Electronic Payments

Knowledge Base · ACH Electronic Payments (EFT Payments)

Applies to: Connected 11.0+  |  Platform: Desktop & Cloud

ARTICLE CONTENTS

1. What Are ACH, EFT and NACHA Payment Files?
   • 1.1  Why Use Bank Payment Files?
2. How It Works in Connected
3. Getting Started
4. Setup and Processing Steps
5. Recording Other Electronic Payments (Wire Transfers and Online Payments)
6. Common Questions
   • 6.1  Is an ACH payment the same as an EFT payment?
   • 6.2  What is a NACHA file?
   • 6.3  Can some vendors be paid by check and others by direct deposit?
   • 6.4  Does Connected send payments to the bank automatically?
   • 6.5  Is a subscription required?
7. Reference Links

1. What Are ACH, EFT and NACHA Payment Files?

Connected can pay vendors by using direct deposit instead of printed checks. Vendor payments are entered in Connected as usual, then used to create a bank payment file to upload to the bank. The bank reads the file and deposits each payment straight into the vendors' bank accounts.

These files go by different names depending on the country and bank:

• ACH (Automated Clearing House) — the term used by banks in the United States.
• NACHA file — the standard file layout for ACH payments in the United States. When a bank asks for a “NACHA-formatted file,” this is what it means.
• EFT (Electronic Funds Transfer) — the term commonly used by banks in Canada, and a general term for any bank-to-bank electronic payment.

Whatever the bank calls it, the process in Connected is the same. It is also described as vendor direct deposit, electronic vendor payments, batch payment files, or bank payment uploads.

1.1  Why Use Bank Payment Files?

• Pay many vendors at once with a single file upload — no printing, signing, or mailing checks.
• Vendors are paid faster and more predictably.
• Payments are still fully recorded in Connected, so A/P, bank account balances, and reports stay accurate.
• Vendors can be emailed a payment advice showing which invoices were paid.

2. How It Works in Connected

Once set up, each payment run follows the same cycle:

1. Create vendor payments in Connected — one at a time, or in a batch. A batch can include both printed checks and electronic payments.
2. Post the payments. Electronic payments don't need a check number and don't print on check stock.
3. Export the bank payment file from Connected in the format the bank requires (for example, a NACHA file for U.S. ACH payments).
4. Upload the file to the bank through its online banking or file transfer service. The bank will then process the payments to the vendors.
5. Notify vendors (optional) by emailing a payment advice for each payment.

3. Getting Started

Each bank requires its own payment file format, so a one-time setup is needed before the first payment run:

1. Contact the bank. Ask the bank to enable ACH/EFT file uploads (sometimes called ACH origination or bulk payment upload) on the business account, and confirm which file format it requires — for example, NACHA for U.S. ACH. Most banks provide a format specification document; keep a copy.
2. Request an EFT Subscription from Accountek. An EFT Subscription is required to create bank payment files in Connected. Create a new support ticket request and include the name of the financial institution and the file format it requires (attach the bank's specification, if available). Accountek will follow up with the subscription details and arrange the payment format setup and any training needed.
3. Complete the setup in Connected once the format file is received — see Setup and Processing Steps below.

4. Setup and Processing Steps

Each step below has its own detailed article.

5. Recording Other Electronic Payments (Wire Transfers and Online Payments)

Not every electronic payment goes through a bank payment file. The “Electronic” payment method in Connected is also useful for recording payments made outside of Connected, such as wire transfers and internet or online bill payments. Electronic payments do not require a check number and do not print on actual check stock when posted.

The Electronic payment method can be used with any of the four Connected payment types (Normal, Quick, Miscellaneous, and Prepayment).

For example, to account for a wire payment to an overseas vendor, issue a Prepayment using the Electronic payment method.

6. Common Questions

6.1  Is an ACH payment the same as an EFT payment?

For vendor payments, yes. ACH is the term used in the United States and EFT is the term commonly used in Canada. Connected handles both the same way — only the file format the bank requires is different.

6.2  What is a NACHA file?

NACHA is the standard file layout U.S. banks use for ACH payments. When a bank requires a NACHA file, Connected creates it using the payment format set up for that bank.

6.3  Can some vendors be paid by check and others by direct deposit?

Yes. A batch payment run can include both printed checks and electronic payments. Vendors set up for electronic payment are included in the bank payment file; the rest print as checks.

6.4  Does Connected send payments to the bank automatically?

No. Connected creates the file, which is then uploaded to the bank through its online banking or file transfer service.

6.5  Is a subscription required?

Yes. An EFT Subscription is required to create bank payment files in Connected. To get started, create a support ticket request with the name of the financial institution and the file format it requires. Accountek will follow up with the subscription details and arrange the payment format setup and any training needed.

7. Reference Links

• Support Ticket Request
• Setup for ACH or EFT Payments
• Adding the ACH/EFT Payment Format
• Generating ACH or EFT Payments
• Creating ACH or EFT Export Files
• Batch/Bulk Email of Payment Advices to Vendors