ccording to Deborah C. Hickok, AAP, CEO and President of ACH Commerce, LLC a company that provides ACH processing solutions, the incredible growth in the volume of automated clearinghouse (ACH) payments in the last few years is really just an inkling of the potential in this area of payment processing.

Despite the advantages ACH processing brings to businesses-faster access to funds and less costly transactions-the lack of detailed, "how-to" information available about this somewhat complicated process has hindered widespread awareness and acceptance of the various functions of processing through the ACH network.

"Even though ACH authorizations over the telephone and Internet and check conversions have grown rapidly over the past five years, corporations, for the most part, are not fully aware of the possibilities ACH processing offers," Hickok said.

On top of that, she said, Check 21 has added even more confusion to the mix for businesses and consumers, and it's important to clarify the differences. "Check conversion allows corporate entities to take a check and convert it to an ACH payment, eliminating the need to take a paper check to the bank. It allows checks to be converted into electronic items.

"Through Check 21, the bank truncates the paper check and images it so that the digital image takes the place of the paper check. It changes the manner of clearing between financial institutions."

The story that ACH numbers tell would seem to indicate that a lot of people are getting the idea, however.

At its Payments 2004 conference in March, NACHA-The Electronic Payments Association reported a total of 10.017 billion ACH payments were processed in 2003, with a combined value of $27.4 trillion; the number of transactions and their combined worth each increased 12% over the previous year. And that's on the consumer end.

NACHA's figures also showed that for the first time, the number of debits originated by commercial financial institutions exceeded the number of credits, due mostly to the expanding implementation of consumer e-check applications since 1998. Those applications include Internet- and telephone-initiated ACH debit; check conversion in accounts receivable (ARC) and at the point-of-purchase (POP); and re-presented checks (RCK).

ACH payments including direct deposit of payroll, social security benefits and tax refunds, as well as direct payment of consumer bills, e-checks, B2B payments and federal income tax payments are all increasing. Collectively, NACHA statistics showed, more than 1.3 billion e-check payments were made, an increase of 154% over 2002.

Hickok's company is positioned to help businesses take advantage of the benefits afforded by processing through the ACH network. ACH Commerce, based in Ooltewah, Tenn., specializes in enabling large corporations and small businesses to process ACH transactions, including check conversions, Web checks, Internet and telephone payments, and direct deposit and debit.

Hickok said her company, which she founded in 2000, is different from its "handful" of existing competitors; several factors contribute to setting ACH Commerce apart. One is that ACH is its core competency. Another is that the company serves as an ASP, developing and offering its clients Web-based solutions tailor made for their specific needs.

Most importantly, though, is the recognized level of expertise she and the management team and staff members bring to the table and share with clients-in ACH processing, software development and business management.

They've gained a credible reputation in the industry, which was instrumental in allowing them the unique privilege of clearing transactions directly through the Federal Reserve Bank, accomplished by way of agreements established with multiple financial institutions.

Hickok has over 15 years' experience in the ACH industry. She and six other staff members are ACH Accredited Professionals (AAPs), meaning they have a certain level of knowledge of and experience with ACH processing and have passed a test administered once a year by NACHA. AAPs must recertify every five years to maintain the credential.

Hickok gives educational seminars, makes regular presentations at banking and industry conferences around the country and has provided training in ACH to the state of Tennessee's Bank Examiners. ACH Commerce is a member of numerous regional ACH associations.

Before starting ACH Commerce, Hickok was part owner of a company that developed software to enable corporations to process ACH payments. Following the sale of that company, she decided to put her knowledge to work in a slightly different way, but the focus at ACH Commerce continues to be on developing flexible solutions for each client's specific needs.

"We took that corporate offering and adjusted it for financial institutions to offer to their corporate clients," she said. "Now, we're acting as an ASP for these institutions and, in most cases, acting as their 'ACH and customer service departments.'"

ACH Commerce itself is keeping pace with the growth shown in ACH processing. The company has doubled in sales and personnel each of the four years it's been in business-it processed more than $2 billion dollars through the ACH network in 2003 and its clients include more than 125 financial institutions and 1500 corporate clients.

Despite the advantages made possible through ACH processing, such as lower transaction costs, faster notification of returns and improved cash flow, many businesses have yet to benefit from them.

"ACH processing has grown rapidly over the last five years," Hickok said. "But there is still a large number of corporations and companies that haven't realized they can process payments this way. They just don't know."

Insurance companies, ISPs, the medical field, utilities, charities, property management companies and catalog and fulfillment businesses are examples of the kinds of corporate clients with whom ACH Commerce works.

While most of its customers process between 20,000 and 30,000 checks a month, its solutions are scalable for businesses processing hundreds or a million or more checks.

Hickok acknowledges that ACH is an evolving industry and that financial institutions have been hampered in their ability to roll out solutions because of limited "mature" product offerings (such as in transport devices that capture images and data) to convert checks into the ACH format. That's all changing, though, thanks in part to ACH Commerce solutions including its Mach 1 and Bullet Scan products.

Mach 1 is a proprietary system, designed, written and maintained in-house, that ACH Commerce has been using for about three years. Hickok said it's their own "service bureau software" and that the company does not license it.

Bullet Scan is a new solution providing high-speed check conversion for ARC and RCK and includes remittance processing, image storage and ACH processing capabilities. It's designed to work as a purchased software application or to be used as a remote capture ASP model.

The complexity of ACH processing can be daunting for businesses, or, for that matter, anyone not completely versed in the regulations-NACHA compiled the ACH network rules and guidelines for 2004 in a book about one inch thick. ACH Commerce eliminates all that uneasiness for its customers.

"The ACH network is governed by NACHA, and all parties, including third parties, must comply with the rules," Hickok said. "We act as the ACH department and do the ACH processing for financial institutions. We're the outsourcer and process the transactions for their corporate customers."

ACH Commerce's clients not only benefit from the collective expertise of its staff members, but also from the relationships they've established with regional and national ACH industry associations.

Hickok said ACH Commerce has direct access to the Fed, making it unique in the business. "We deliver transactions directly to the Fed. This means we can take advantage of the Fed windows-there are four windows open in a 24-hour period-to provide better service to our corporate clients.

"We can provide later cut-off times and respond faster to return items. We're able to process and receive return information much faster because we're not restricted by a banks' ACH processing software or hours of operation," she said.

From a cash management standpoint, processing transactions through the ACH is just a better way to do business. "The advantage to corporations with ARC, for example, is that the deposited funds are collected and available much more quickly," she said. "NSF items are back at the originator's location in two days. And electronic items are first in line-they post at paying banks before paper items."

"We are not out to change the way our customers do business, rather, we're helping them streamline," Hickok said. "We're focused on providing technology and processing. They don't even have to change their primary banking relationships."