Accounting Dictionary

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ACH Debit

Definition: An ACH debit allows a payee to initiate a debit of the payer's bank account, with the funds shifting into the payee's bank account. This is normally done with the written approval of the payer. The ACH debit is typically implemented between companies that plan to do business with each other for an extended period of time, and who wish to avoid the expense of preparing a large number of check payments during that time.

The ACH debit can be fraudulent, so many companies install ACH debit blocks on their accounts, preventing such debits except for those that are specifically authorized in advance.