Direct credit

A direct credit is an electronic transfer of funds through the ACH (Automated Clearing House) system. The payment is initiated by the payer, which sends funds directly into the bank account of the payee. Settlement usually occurs within one or two business days. Direct credits are commonly used to make periodic compensation payments to employees. This approach may also be used with suppliers.

There is little room in a direct credit transaction for additional information about the nature of a payment, so this detail may be sent to the payee separately in a remittance advice.

Similar Terms

A direct credit is also known as direct deposit.

Related Courses

Corporate Cash Management 
Payables Management 
Treasurer's Guidebook