Understanding ACH: The Key to Assisted Living Investing Success
Feb 20, 2025
As an assisted living facility owner or manager, you've probably heard of ACH, or Automated Clearing House. But do you know how it can transform the way you manage your facility’s finances? ACH is an electronic payment network that makes transferring money between banks simple, fast, and cost-effective.
Whether collecting resident fees, paying employees, or managing vendor payments, ACH can streamline your financial operations. It reduces manual tasks, minimizes errors, and often costs less than traditional payment methods. Let’s dive into what ACH is, why it’s perfect for assisted living facilities, and how to start using it today.
Check out the video too:
Final Thoughts
If you need help getting started, download our free business plan checklist. This valuable resource can help you write a solid business plan to help you launch your assisted living business.
Need help figuring out where to start? Join the next Roadmap Challenge and build your launch plan with me.
Show full transcript 👇
Transcript
00:00:00
you start looking into direct deposits for your facility you're going to hear the term ach thrown around but what does ach mean what does it stand for how does it work we're going to get into that in today's video hi everybody i'm brandon gustafson i own and operate two assisted living facilities and i created this channel to help people like you learn the ins and outs of investing in assisted living welcome to assisted living investing [Music] welcome back to assisted living investing in our last video we talked a
00:00:46
little bit about the secret about direct deposits for medicaid payments uh what that secret is and how it works so go ahead and watch that video so you can kind of understand what that process is like and what you need to do so you can set up direct deposits for medicaid payments today i wanted to get into ach what it is how it works let's talk about an overview of ach so ach stands for automatic clearing house an ach is an electronic network of financial transactions that generally is occurring
00:01:18
within the united states and ach transfers can include things like a direct deposit for payroll and vendor transactions i'll get a little bit more into that a little bit later in the video i'm going to talk about some of the terms and things around ach and those types of transactions ach allows you to accept or make payments so you can receive payments like from your residence in an assisted living facility or from medicaid or an mco um and you can also use it to pay your bills or your debt service your mortgage
00:01:52
your insurance payments and those types of things so you can use it kind of both ways to come in and to go out of your facility just really streamline some of that process there some examples of ach and for each of these um you'll often need to provide something like a avoided check or a bank letter to the vendor or the paying party sometimes you'll have to do what's called a micro transaction so a micro transaction is uh you know if you're working with two different banks um the
00:02:24
the bank that wants to set up the ach transaction will send two micro payments to the other bank and they'll be for three cents and six cents or five cents and 11 cents it just kind of varies they'll send it they pull the money back out and then you have to go into the the other banking institution and verify how much each of those two micro payments were and that kind of sets it up so those are some of the options that you have when setting up uh ach payments um some of the the ways that you can do
00:02:57
that i talked a little bit in a previous video about um the process of doing that with voided checks and bank letters and what you need there so go ahead and watch that video to get a little more information on what that process is like and how that works so some examples of ach one would be like a direct deposit so this could be somebody like medicaid or an mco or even a resident in their family and i've talked about medicaid and mcos i'll link that up above so you can go and watch those and what the difference is
00:03:28
and how they work so you can learn a little bit about that but it's a direct deposit um you bill medicaid you build the mco they do a direct deposit into your account and then the funds are there um so it's great you can use automatic payments when you are setting up for recurring bills things like utilities or your debt service your mortgage payment insurance premiums hoa dues anything that is kind of like a set thing you can set that up we do it with our pharmacies we do it with um you know our
00:04:01
utility vendors we do it with our telecom vendors we we do it with a lot of different groups our fire fire and safety stuff we use ach to pay all of our vendors i have written maybe three checks in the year that i've owned our facilities so don't do a lot of check writing do a lot of online bill pay ach tie payments just is a lot more efficient for me you would also use ach when you're transferring money between two different bank accounts so let's say you've got your real estate entity and
00:04:35
you've got your operational entity and i've i've got a video where i talk about how i've structured my businesses i'll link that up above but you've got these two entities you have a lease agreement between your operational entity and your real estate entity and you need to make that lease payment and so you would set up a basically a transfer an ach payment from the operational side to the real estate side um and do that in setting that up you're going to use that micro
00:05:00
transaction uh that i explained a little bit earlier in this video um to link those accounts another one would be you've got your business account and then you have your personal account and you need to do an ownership draw so using those micro transactions you would set up a way for you to do an ach payment between those two um bank bank accounts and then you can do the transfer over and it comes over and and there you go you can get the payment that way so those are some examples of of ach transactions that you might see
00:05:31
in your ownership of the assisted living facility a few terms around transactions and ach i just want to make sure that we're clear i've talked a lot about ach in this video and have used it very broadly but i want to get a little bit more specific so you are aware of some of the the other terms that uh you might encounter as you're doing this and what the difference is between each of those terms so number one is direct deposit so a direct deposit is when funds are pushed into the account
00:06:00
whereas ach is when the funds are being pulled out of the account is generally the difference so direct deposit and ach are are not exactly the exact same a lot of people use them interchangeably but i just want to make sure that that's clear the difference between those two eft so eft stands for electronic funds transfer and ach is actually a specific type of eft an eft is more of a broad definition of just digital payments and the ach falls underneath that umbrella so you might hear people also talk about eft
00:06:38
um you might hear ach a lot of the time they're talking about the same thing uh wire transfers wire transfers actually very similar to ach they work very similarly from uh from a standpoint from the bank's perspective where you have money going out of one account and going into another account a wire generally is going to happen uh on the same day or or next day ach is going to typically take a few days for the funds to process and get transferred into an account the difference that you would need is
00:07:14
you know a wire is going to typically have a fee associated with it and i'll link a video i'm going to talk about that in a future video about the fees and things like that that you could expect to see when you're working with a banking institution but that wire is going to generally have a fee associated with it and it's going to typically be larger funds you know so when we purchase our facilities we had to do our down payment and you know it's 10 15 20 of a purchase price so if you have a
00:07:43
million dollar home that you're purchasing and you've got to do 10 that's 100 000 you don't want to be carrying around a check the ach is just going to take a little too long so you would do a wire transfer in that instance and so you call up your bank you verify your social security number a few other things they go you have to validate a lot of things sign some forms and things like that to the point that you can do that wire transfer whereas if we're doing just our mortgage
00:08:12
payment i'm not going to set up a wire transfer every time i've got to pay my you know three to five thousand dollar mortgage payment i'm just going to set up an ach payment for that and that's how i'm going to work on those another one is bill pay so bill pay services that a lot of banking institutions have are done through a ch often and so what you would do is you know you're setting up you're using that voided check you're giving the banking information to that
00:08:42
utility or whoever it is so that they can draw the funds as needed from there generally that's done through ach is a bill pay transaction so some of the pros and cons of ach payments pros on the positive side is uh with ach you have some added convenience it just it's just easier you don't have to write a check you don't have to buy a checkbook you don't have to spend a bunch of time doing that you don't have all the paper stuff you can do it all online it's just a little more
00:09:14
simple it's a little more convenient it's going to help you out with that it's going to also help automate things it's going to make it you know you can set these things up um to to do a set amount you could set it up to pay off the full amount of a bill um you can set it to pull out on a certain day of the month you have a lot of control on it you can automate it and um just kind of get it in place how you want it to be generally when you're doing ach there's going to be far fewer fees than doing
00:09:42
something like a credit card the interest rate certainly doesn't exist but your fees are are just not going to be there and so it's something that you would want to consider as well it's probably going to cost you a little bit less money to to go ahead and do ach ach will speed things up uh once you set it you can kind of forget it you don't want to you don't want to forget it but you can't you can kind of put it on autopilot um it takes a little bit more time maybe upfront although compared to writing a
00:10:09
check probably not um it's gonna let you kind of look at that and and it's gonna let you speed things up in the future and just makes it a lot easier for you to manage things and then those automated automated payments because they're automated because you set up different parameters for how you want this to work you're likely going to have less errors it's going to be the right amount that goes in everything is going to be fine and so that's something else you know it reduces those errors
00:10:35
for you on the con side the negative parts of ach obviously is security you're sharing your bank account information you're sharing your your your bank account number and you're sharing your routing number you're giving that to somebody else so there's security things there whether it's the way that you know if there's a security breach at that vendor or something like that or you've got to have a voided check or one of these letters from the bank that has that information
00:11:02
you want to keep it handy but you also want to make sure that it's in a secure location so that's something else that you want to to consider when you're looking at ach payments and then also you want to make sure you're keeping an eye on those transactions that happen just because you set it up once and you hope that it works out doesn't mean you can just completely forget about it you want to make sure that you're not getting double billed for something or that fraud isn't occurring on your
00:11:26
account i actually had something like this in my personal life where our city changed their billing process and i had set it up on ach payments and they changed their billing process and i just wasn't getting the mail wasn't getting the emails like things just didn't get to me that told me about the change and my ach payment had been cancelled it wasn't happening so i had three months i started getting these angry notices from the city that they're going to turn off my water and i
00:11:56
was like what the heck i have this set up and it was just because they had switched their their process over and my account wasn't linked to it anymore so i just had to go in correct it paid off everything was fine but something that you want to make sure that you're staying on top of so that something like this doesn't happen um and everything works out for you so uh in our next video we're gonna be getting to into should you pay uh set up direct payments from your residence so
00:12:23
we'll talk about that in our next video talked about it with medicaid and mcos and and and doing that but what about your residence should you do something there to learn more about investing in assisted living uh make sure you visit me on assistedlivinginvesting.net i'd love to see over the free content uh resources can set up a consulting call with me and make sure you follow me on my other social media platforms and remember it doesn't take a lot just a little bit just keep going step by step
00:12:48
by step keep making progress and i promise you will be successful [Music]
Download Your FREE Calculator
Stay connected with news and updates!
Join our mailing list to receive the latest news and updates from our team.
Don't worry, your information will not be shared.
We hate SPAM. We will never sell your information, for any reason.