Automated Clearing House

Automated Clearing House (ACH) is a U.S. financial network that processes electronic payments and transfers between bank accounts. It helps MCA brokers and funders by enabling fast, low-cost, and predictable repayment flows, since most merchant cash advances and revenue-based financing products rely on ACH debits to collect repayments.

What Is Automated Clearing House?

The Automated Clearing House is a centralized system that moves money electronically between financial institutions. It is used for payroll, bill payments, loan repayments, and business-to-business transactions.

In MCA and small business lending, ACH is the backbone of repayment collection.

Instead of merchants writing checks or making manual transfers, ACH allows funders to debit repayments automatically on a daily or weekly basis. Operators value it because it standardizes repayment flows and lowers operational overhead compared to manual collection.

How Does Automated Clearing House Work?

The ACH system processes transactions in batches rather than in real time.

Transaction initiation: A merchant authorizes a funder to debit their account at regular intervals.
Batch submission: The funder’s bank groups debit requests and sends them to the ACH operator.
Clearing: The ACH network routes debits to the merchant’s bank.
Settlement: Funds are transferred from the merchant’s account to the funder’s account, typically within one to two business days.

In Heron, ACH data is parsed and mapped as part of the scrubbing process.

Transaction identification: ACH debits are extracted from bank statements automatically.
Obligation mapping: Debits are categorized into items like loan repayments, rent, or stacked advances.
Risk analysis: Failed ACH debits, irregular amounts, or unusual frequencies are flagged.
CRM write-back: Obligations are written back into CRM records to give underwriters a full repayment picture.
Next action: Deals are scored for appetite fit and repayment capacity using ACH signals.

This makes ACH repayment activity visible to brokers and funders without manual review.

Why Is Automated Clearing House Important?

For brokers and funders, the Automated Clearing House is important because repayment flows are the foundation of MCA and RBF underwriting. Missed or irregular ACH debits can indicate stacking, overextension, or merchant instability.

Heron enhances visibility by automatically surfacing ACH repayment activity. This reduces the risk of missed obligations and strengthens underwriting decisions.

Common Use Cases

ACH is used in almost every merchant cash advance and small business financing context.

Collecting daily or weekly repayments for MCAs.
Identifying payments to other funders as signs of stacking.
Flagging failed debits as early risk indicators.
Categorizing ACH debits into obligations like rent, utilities, and loan payments.
Feeding repayment activity into risk models automatically.

FAQs About Automated Clearing House

How does Heron handle ACH repayment data?

Heron scrubs ACH transactions from bank statements, maps recurring debits to categories, and writes structured obligations back into CRM fields for underwriting.

Why is ACH important for MCA brokers and funders?

It provides predictable repayment flows, while also serving as a clear signal of merchant risk when debits fail or obligations are excessive.

What outputs should teams expect from ACH data in Heron?

Teams can expect structured CRM fields showing repayment obligations, stacked advances, and failed debit flags that inform underwriting decisions.