A significant aspect of preserving investor confidence and obtaining financial commitments is by providing additional safeguards for ACH payment transactions. Investors want reassurance that their resources will be sent directly to the recipient, and as the sponsor, you want to ensure that these transactions are locked in so the deal can be completed successfully.
However, manual methods of securing commitments often come with a serious downfall, a lack of security. Physical wire transfers offer no transparency and irreversible consequences if cash is sent to another individual. In addition to insufficient protection, fraudsters are always on the watch, trying to acquire tracking information and transaction codes to hack anonymously into accounts.
Lastly, consider the expense associated with wire transfer fees. While some banks may not charge a fee to accept wired payments, others do, ranging from $25 to $30 per transfer to bank accounts in the US.
So what’s the solution?
To offset these challenges between investors and sponsors and to help maintain a level of confidence between both parties, we are thrilled to introduce Secure ACH Funding, a robust financial tool designed to address the irregularities around money transfers and reduce the manual operations that would otherwise be a part of your daily workflow.
Investors can send funds safely and securely within the investor portal – through Plaid’s data protection infrastructure and Dwolla’s ACH payment API, safeguarding private bank information and sensitive financial data while reducing the possibility of fraud.
ACH (or Automated Clearing House) is governed by the National Automated Clearing House Association (Nacha), which oversees guidelines regarding electronic payments in the United States.
Nacha is responsible for developing and monitoring rules and codes of ethical practice, risk management, and quality within the ACH networking system for financial institutions. These security guidelines protect sensitive ACH data for merchants and third-party processors.
Under these strict systems, ACH provides secure transmission of funds that are always monitored and easy to be traced from person to person or entity to entity. In addition to security, ACH payments provide convenience in reconciling issues that may occur in the middle of a transaction. Through ACH payments, the direct transfer of funds is made between accounts, and account numbers are kept private. If an error occurs - ACH payments can always be retracted, while wire transfers cannot be reversed.
Lastly, ACH payments have gained traction and are widely used as the most common method of B2B electronic payments. Total dollars transferred through ACH payments topped $8.89 trillion in 2021, outperforming check and wire transfers.
In addition to having that extra layer of protection, ACH payments act as a convenient payment solution for managing cash flow efficiently between businesses. Common uses for ACH payments include:
Other ACH use cases include billing/recurring payments, paying taxes, and business-to-business supplier transactions. To find out more, check out Why do businesses use choose ACH?
While raising capital, visibility and time are crucial when acquiring resources. This means that you need to be notified throughout the transactional cycle. Secure ACH Funding lets you and your investors view when funds are released, pending, and safely obtained into all verified accounts while you manage commitments.
As we mentioned previously, wire transfers cost. Secure ACH Funding conveniently caps ACH fees at $25, which is less than standard bank fees. Therefore, enabling you to seamlessly collect up to $500k from a single investor without worrying about exhausting fees on moving transactions.
Convenience. No more paper checks, invoices, and unwanted trips to the bank. Investors can initiate contributions through the commitment process without leaving the platform, making digital payments simple and easy..
At InvestNext, we’re always creating solutions to streamline the investing process for your investors. Through our Secure ACH Inbound Funding feature, sponsors on our platform no longer have to worry about reconciliation issues, sharing sensitive wire instructions, chasing down investor funds, and other logistical issues that, in the past, have plagued the fundraising process.
InvestNext provides a comprehensive solution for investing in commercial real estate. Our full-service investment management software allows you to efficiently oversee all aspects of your capital raise in one place.
Schedule a demo today to see how our team can help you to welcome the next level of raising capital.
Resource:
[1] https://ebizcharge.com/blog/7-benefits-of-ach-payments/