Understanding the ACH Payment Lifecycle
The Automated Clearing House (ACH) Network is the backbone of electronic payments, handling transactions such as:
ACH Debits – Payments withdrawn from a client’s bank account (e.g., when you collect client payments for services).
ACH Credits – Funds deposited into your firm’s account (e.g., when client payments are processed and settled).
ACH Debits – How They Work
Client Authorizes Payment
Your client authorizes payment for your services through Canopy’s client portal.
They provide their bank details and approve an ACH debit transaction.
You (the CPA firm) are the "Originator" of the ACH payment request.
Transaction is Sent to the Bank
The payment processor Adyen acts as the ODFI (Originating Depository Financial Institution) for your firm.
Adyen bundles multiple ACH payments from different CPAs and submits them to an ACH Operator (either the Federal Reserve or The Clearing House).
Funds Are Withdrawn from the Client’s Bank
The ACH Operator sorts the transaction and sends it to your client’s bank (RDFI – Receiving Depository Financial Institution).
The client’s bank account is debited, and the funds are sent to Adyen.
The client is the "Receiver" of the transaction.
Funds Are Deposited Into Your Firm’s Account
Adyen processes the collected payment and deposits the funds into your firm’s bank account after settlement.
ACH Credits – How They Work
Adyen Initiates a Payout to Your Firm
Once payments from multiple clients are processed, Adyen initiates a payout to your firm’s bank account.
Adyen is the "Originator", and its bank is the ODFI (Originating Depository Financial Institution).
Transaction is Sent to the ACH Network
Adyen submits the payout request to an ACH Operator (Federal Reserve or The Clearing House).
The ACH Operator sorts the transaction and forwards it to your firm’s bank.
Funds Are Deposited Into Your Firm’s Bank Account
Your bank (RDFI – Receiving Depository Financial Institution) receives the deposit request.
Your account is credited with the payout, making your firm the "Receiver".
Settlement Timing for ACH Payments in Canopy & Adyen
80% of ACH payments settle within one banking day or less.
ACH Debits (client payments to your firm)
Settle the same day or the next banking day.
ACH debits cannot have a settlement date more than one banking day into the future.
ACH Credits (payouts from Adyen to your firm)
Can settle the same day, the next banking day, or within two banking days.
U.S. Treasury is the only entity that can set an ACH credit settlement date beyond two banking days.
Overall ACH Network Performance
Since all ACH debits settle in one banking day or less and most ACH credits settle within one banking day.