How to create a NACHA-compliant ACH authorization form

If you’ve ever set up a subscription or paid your supplier with a bank payment online, you’ve likely encountered an ACH or Pre-Authorized Debit (PAD) agreement. But what exactly is this form, and how do you ensure yours is up to snuff?

Whether you’re a small business owner or someone handling ACH payments, understanding how to create a NACHA-compliant ACH authorization form is essential. Don’t worry—it’s easier than it sounds, and we’re here to walk you through it.

What’s an ACH authorization form?

An ACH authorization form is essentially a permission slip that allows your business to take payments directly from your customer’s bank account. This could be for anything from recurring subscriptions to a one-time bill payment. The key here is that the form needs to meet specific standards set by NACHA, the organization that oversees ACH transactions. Let’s break down the essentials you need to include in your ACH payment form to keep everything above board.

Must-have elements on your pre-authorization debit form

To make sure your ACH form is compliant, you’ll need to include the following:

• Customer’s account and routing numbers These are the basics. The account number tells you which bank account the money is coming from, and the routing number tells you which bank to send the request to.
• Account type (Checking or savings) You’ll also need to note whether the payment is coming from a checking or savings account. It’s a small detail, but an important one.
• Clear payment information This part is all about clarity. Your pre-authorized debit agreement should clearly state how much money will be taken out, how often, and on what dates. It’s all about being upfront with your customers to avoid any confusion.
• Signature or identity authentication Traditionally, a signature is needed. But in today’s digital world, you can also use identity authentication methods like a secure login or a digital signature.
• Date of agreement Don’t forget to include the date when your customer agreed to the ACH authorization. This could come in handy if there’s ever a question about when they signed up.
• Your business’s contact information Make it easy for customers to get in touch with you. Whether it’s a phone number, email, or even a physical address, this information should be front and center on your ACH permission form.
• Instructions on how to revoke authorization Customers have the right to cancel their authorization, and your form should tell them exactly how to do that. This not only keeps you compliant but also builds trust with your customers.

Tips for creating a customer-friendly ACH authorization form

Now that you know what to include, let’s talk about how to present it. Here are some tips to make your ACH authorization form easy for your customers to understand and use:

• Keep it simple: Use plain language and avoid unnecessary jargon. The clearer your form, the fewer questions you’ll get from customers.
• Be transparent: Lay out all the payment details in a straightforward manner. This helps set the right expectations from the start.
• Offer flexibility: Provide both electronic and paper versions of your ACH payment form. Some customers might prefer one over the other.
• Update regularly: Laws and regulations can change, so make sure to review and update your pre-authorized debit agreement form periodically.
• Simplify the process: Include it in your customer intake process so you don’t forget to take their payment information when they're getting started.

Save time with Helcim’s ACH authorization template and guide

Creating an ACH form from scratch can be time-consuming, but you don’t have to do it alone. Helcim offers a ready-made ACH guide and authorization template that’s fully compliant with NACHA’s requirements.

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Next steps

Great! After your customer completes the ACH authorization form, follow these steps to ensure everything runs smoothly: Store securely: Keep the form in a secure, accessible location—whether digitally encrypted or in a locked file— to protect customer information.

• Enter payment details: Input the payment details into your system exactly as authorized, double-checking for accuracy to avoid errors.
• Confirm with customer: Send a confirmation email or message to the customer, outlining the payment schedule to ensure everything is correct.
• Monitor and maintain records: Regularly check that payments are processed correctly and keep records of the transactions for at least two years.
• Handle changes promptly: If a customer requests to cancel or modify their authorization, update your records immediately and confirm the changes with them.
• Review periodically: Regularly review stored forms to ensure compliance with any new regulations and keep your records up-to-date.

Ready to start accepting ACH payments for your business? Sign up with Helcim today—no monthly fees, no contracts, just affordable ACH payments and more at your fingertips.

Frequently asked questions

Q: Why is it important for an ACH authorization form to be NACHA-compliant?

A: NACHA compliance ensures that your ACH transactions are processed securely and legally. It protects both your business and your customers by establishing clear guidelines for how funds can be transferred.

Q: How long should I keep a copy of the ACH authorization form?

A: It’s best practice to keep a copy of the signed ACH authorization form for at least two years after the last transaction. This helps in case of any disputes or compliance checks.

Q: Can I use a template for my ACH authorization form?

A: Yes, using a template can save you time and ensure that your form meets all NACHA requirements. Just make sure to customize it with your specific business information and policies.

Q: What is the difference between an ACH authorization form and a pre-authorized debit agreement?

A: An ACH authorization form and a pre-authorized debit agreement are essentially the same things. Both terms refer to the document that allows a business to withdraw funds from a customer’s bank account with their permission. The terminology might vary depending on the region or industry.

Q: How long do ACH payments take to process?

A: ACH payments usually take about four business days to process, but it can take up to a week when weekends are included. Expedited options like same-day processing are available with some providers, depending on their approval and come with additional costs.

Q: What happens if my customer’s ACH payment fails?

A: If an ACH payment fails, it’s often due to insufficient funds, a closed account, or incorrect details. The transaction won’t go through, and you’ll need to follow up with the customer to resolve the issue. A fee may apply for failed transactions.