A sample letter asking customers to pay by ACH should do four things in plain language: tell the customer you’re moving to electronic payments, say what bank details you need, spell out exactly what they’re authorizing you to debit, and explain how they can cancel. Below is a template you can drop your details into, followed by the pieces of the authorization form that have to be there for the debit to be valid under Nacha rules.
The Letter You Can Send
Replace the bracketed placeholders with your own details. Keep the tone straightforward. Your goal is to make the switch feel easy, not to bury the customer in legal language.
Dear [Customer Name],
We are updating our payment process to accept electronic transfers through the ACH network. ACH payments are faster, more secure, and less expensive than paper checks for both of us.
To set up electronic payments on your account, please complete the attached authorization form and return it to [billing contact email] by [response deadline]. You will need your bank’s routing number, your account number, and the name of your financial institution. If you prefer to submit this information online, you can do so securely at [portal URL].
A few things to know about the authorization:
- What you’re authorizing: [Company Name] to debit your [checking/savings] account for [describe amount or invoiced amounts] on [describe frequency — for example, the 15th of each month, or upon invoice].
- How to cancel: You can revoke this authorization at any time by notifying us in writing at [contact email or mailing address]. Please allow at least three business days before the next scheduled payment for the cancellation to take effect.
- First payment: Once we verify your account information, your first ACH payment will process on [date or description of timing].
If you have questions, contact [name] at [phone number] or [email]. We appreciate your help in making this transition smooth.
Sincerely,
[Your Name]
[Title]
[Company Name]
Why ACH Is Worth the Ask
If you want a line or two of justification in the letter, the numbers back it up. A 2022 survey cited by Nacha put the median cost of sending or receiving an ACH payment between 26 and 50 cents for most businesses, dropping to 11 to 25 cents for companies with annual revenue above $5 billion.1Nacha. ACH Costs Are a Fraction of Check Costs for Businesses, AFP Survey Shows Paper checks run several dollars each once you add printing, postage, manual handling, and deposit fees. Standard ACH entries settle on the next banking day, and same-day ACH entries can settle within hours through one of three daily processing windows.2Federal Reserve Financial Services. FedACH Processing Schedule
What the Authorization Form Must Contain
The letter sells the idea. The attached authorization form is what actually lets you pull money. Nacha governs the ACH Network, and its Operating Rules require a written or electronically signed authorization before you can debit a customer’s account.3Nacha. How ACH Payments Work For a consumer account, a compliant authorization must include seven essential pieces of information covering the amount you’ll debit, the timing or frequency of the debits, and instructions on how the customer can revoke.4Nacha. The Importance of Compliant ACH Authorizations
Nacha publishes a sample authorization template that collects the customer’s account type (checking or savings), depository institution name, routing number, account number, and signature with date.5NACHA. Sample Authorization for Direct Payment via ACH A vague “I agree to pay electronically” won’t do. The authorization has to be explicit about amount, timing, and how to stop it.
Choose the Right Transaction Code
ACH entries are classified by Standard Entry Class codes. The two most common for collecting payments are PPD and CCD. PPD (Prearranged Payment and Deposit) is for debiting a consumer’s personal account — subscription payments, utility bills, insurance premiums. CCD (Corporate Credit or Debit) is for transactions between two business entities, like collecting on a B2B invoice. Using the wrong code can trigger returns and compliance problems, so match the code on your form and your bank’s setup to the type of customer you’re billing.
Verify the Account Before the First Debit
Since 2021, Nacha rules have required originators of WEB debit entries to validate account numbers before the first transaction. The rules are technology-neutral, so you can send a prenotification entry, use micro-deposits, connect to a third-party validation service, or verify through an API. Micro-deposits are the common choice for smaller businesses: you send one or two tiny deposits (often a few cents) to the customer’s account and ask them to confirm the exact amounts. The round trip usually takes two to three business days. Skipping validation isn’t an option; a fraud detection system without an account validation component doesn’t satisfy the rule.6Nacha. Supplementing Fraud Detection Standards for WEB Debits
How to Send It and Set a Deadline
Batch-emailing through your accounting software or a mail merge tool lets you reach your whole customer list at once while tracking who opened the message. For customers who still operate on paper, send a physical copy with a prepaid return envelope. Removing that small friction point makes a real difference in response rates.
Set a realistic deadline. Two to three weeks gives most accounts-payable departments time to gather their banking details and route the form through internal approvals. After the deadline, follow up with customers who haven’t responded. A short reminder email works better than a second formal letter. Track adoption in a spreadsheet or your accounting system so you know which accounts have switched and which still need attention. When the first ACH payment from each customer clears, check the amount and settlement date against the invoice to confirm the setup was correct.
Store the Authorization and Honor Revocations
Nacha rules require you to keep each signed authorization for two years after the authorization is terminated or revoked. The clock starts when the customer cancels or when you stop using the authorization, whichever comes later. Store authorizations where you can retrieve them quickly if a customer disputes a charge.
Customers have the right to revoke their ACH authorization at any time. Under federal law, a consumer can stop a preauthorized electronic transfer by notifying their bank at least three business days before the scheduled payment date.7Consumer Financial Protection Bureau. How Can I Stop a Payday Lender From Electronically Taking Money Out of My Bank or Credit Union Account If the bank asks for written confirmation after an oral stop-payment request, the customer has 14 days to provide it. Your authorization form has to include revocation instructions. That’s not a nice touch; it’s a Nacha requirement.4Nacha. The Importance of Compliant ACH Authorizations When a customer revokes, stop debiting immediately and record the revocation date so you know when the two-year retention clock begins.
While you’re holding routing and account numbers, treat the data accordingly. Don’t park completed authorization forms in unencrypted email folders or shared drives where anyone can open them. Use your bank’s secure portal for initial data entry when you can, and limit internal access to the people who actually process payments.
When a Payment Comes Back
Not every ACH debit will go through on the first try. When one fails, your bank receives a return entry with a reason code. R01 (insufficient funds) and R09 (uncollected funds) are usually temporary; retry after contacting the customer. R02 (account closed), R03 (no account), and R04 (invalid account number) mean the information is wrong and needs to be corrected before you try again. R07 (authorization revoked), R08 (payment stopped), and R10 (not authorized) are more serious. An R10 means the customer is disputing that they ever gave you permission, and if you can’t produce a signed authorization, that’s a compliance problem. Clean, accessible records of every authorization form are what protect you here.