How to Use Recurring ACH Processing to Pay Utility Bills?

Recurring ACH processing is one of the best ways to ensure that you do not miss out on critical bill payments. A simple one-time setup can help you pay for utility usage and other bills automatically. This guide will help you see how you can set up recurring ACH processing to pay for utility usage.

How to Set up Recurring ACH Processing

Step #1: Ask for Transfer of Funds Through ACH Technology

Most utility companies accept ACH payments from their customers. However, a few of them do not. So, before we set up your account for recurring ACH processing, we need to confirm that your utility software vendor is okay with accepting regular payments through ACH.

To check if your utility company accepts ACH, try signing up on their payments page and look for the different bill payment options. If you do not find a way to pay through ACH, you can call the customer service representative to ask if they have tie-ups with any third-party payment processors. 

If you are a business owner yourself, you can partner with a Nacha Preferred Partner as your payment processor (Nacha Stands for National Automated Clearing House—The government body that controls and manages ACH payments throughout the country) to accept ACH transactions seamlessly.

Step #2: Sign Up for Virtual Terminal / Third-Party Application

Popular utility companies now have an online portal to help their customers pay their bills online. You can sign up on these portals to start paying your utility bills with the ACH technology.

If you are a business owner, financial institution, or utility company, you can start accepting payments through ACH. A reliable third-party payment processor can help you set up the new payment method within a few days. So, start accepting ACH payments today!

Step #3: Select Recurring Payment Option

When signing up on the website, ensure that you select the correct recurring payment option. This option will help the utility company ask for and receive payments from your bank account on a set schedule without asking for new authorization each time. If you do not select this option, you may have to pay your bills manually every week/month.

Step #4: Select Variable Payments Option

Utility bills are usually variable. This means that your bill won’t be the same amount every week/month. To help the utility company charge you the correct invoice amount periodically, you must select the variable payment option for automated payments to occur.

With money in the bank account regularly, knowing an approximate bill payment to budget for monthly, the recurring bill payment will get paid, whether the same or slightly varied, each month. The utility bill gets paid automatically without needing to do anything else.

Important: You can always raise a dispute request later if the utility company charges you more than the invoice amount. However, most modern-day recurring billing processes are automated, so there is little to no room for error. Ideally, you should still check your bank statement every month to ensure that no company has overcharged you for their services.

Step #5: Sign Authorization Forms

For the final step, you need to sign the correct authorization forms digitally or in person for the utility company to accept payments from your accounts.

Important: You should keep a scanned or a physical copy of the authorization form handy to settle any disputes at a later stage. Learn more about ACH applications and why you should start using them to send and accept payments.

Benefits of Recurring ACH Payments

Here are a few reasons why you should consider ACH as your top priority for electronic payments of your utility bills. 

• Automated Bill Payments: Think about receiving a physical copy of your utility bill. Once you receive the bill, you need to travel to the nearest office to pay it. Or, you must sign a new check and mail it to the utility company for processing your invoice. This entire process often takes multiple business days.  Now, think about doing this every month/week. Sounds cumbersome? It is. With automated recurring ACH payments, you can quickly pay your bills without having to write a new check or pay in person at the billing counter. Automatic payments also help you ensure that you do not attract any penalty for late payment. The utility company will also be happy to provide unhindered services on receiving timely payments. 
• Low Processing Fees: ACH is just one of the several ways through which you can pay your bills. Most utility companies also accept debit cards, wire transfers, and credit card payments. So, what makes ACH payments so lucrative? Nacha offers its services at lower costs compared to the other payment modes. Unlike the other methods of payment that charge a certain percentage of the total transfer amount as a processing fee, ACH usually charges a small flat fee. Although the fee may seem low, it can quickly rack up to a significant figure over multiple transactions. Paying through ACH technology not only helps you save time and effort, but also money with lower transaction fees.
• Seamless Online Transfer: ACH is undoubtedly one of the safest ways to transfer funds online. Nacha works directly with the Federal Reserve to periodically update the rules and regulations and strengthen the overall ACH network. ACH was known to be one of the slowest methods of paying online. Transfers through ACH often took 4-5 business days to process. However, modern-day ACH customer payments take less than 1-2 days to process. And Same Day ACH is now a thing.  

Summary

The ACH technology can help you automate your utility bill payment for seamless transfer. Here’s a summary of how you can start paying your bills with this payment method:

• Find out if your utility company accepts ACH payments
• Sign up for ACH billing (In-person or Online)
• While signing up, select the recurring payment option
• Make sure you sign up for a variable pay option
• Sign the necessary authorization forms

Double-check all your data entries and authorization forms before hitting submit. If you have questions while signing up for automated billing, speak with a representative of the concerned utility company before completing the process.

Business owners looking to accept bills online via ACH and credit cards in one online terminal can get started with a simple quote.

Are you an independent software vendor (ISV) looking for a business partner to seamlessly integrate payment technology with your applications using iFrame or custom hosted payment portals for your clients? Learn more about our residual revenue share program.

Date originally published: January 25, 2022

Date updated: March 20, 2024