Automatic Funds Transfer (AFT)

What an Automatic Funds Transfer is

An Automatic Funds Transfer is an arrangement to move money between accounts on a schedule, without someone initiating each transfer manually. You set the source account, receiving account, amount and frequency in advance. A schedule could be weekly, every two weeks or monthly.

Your business might use an AFT to collect a recurring customer payment or move money between its own accounts. For example, a customer could authorize a $500 monthly withdrawal from a bank account, an illustrative amount, to pay an invoice. In the US, these transfers usually run through ACH. AFT describes the standing instruction, while ACH is the payment network that processes the transfer.

AFT can also mean Account Funding Transaction in card-payment materials. That is a separate card transaction, not the recurring bank-account arrangement described here.

An AFT automates the instruction, but your schedule and account balance determine whether the money is ready when you need it.

How a scheduled transfer works

You arrange the transfer through a bank or payment service, or your customer authorizes your business to withdraw a recurring payment. The setup specifies the accounts, amount and schedule. A payment service that transfers your balance to your bank is another kind of automatic transfer, but it moves funds to you rather than collecting an invoice from a customer.

The schedule is not a guarantee that funds arrive on the calendar date shown. Transfers scheduled for a weekend or holiday can be processed on a nearby business day. A first-time setup also takes time to establish, so confirm the start date and next transfer date before relying on the funds for a bill or payroll.

What AFT means for your cash flow and costs

AFT is a payment arrangement, not a fee schedule. Your bank or payment service sets any transfer charges, and the term itself does not tell you whether a transfer is free. Faster or immediate access can carry a fee, while standard transfer options are described as having fewer fees or no fees in some services. Compare the displayed transfer charge and arrival estimate before choosing a speed.

A failed or delayed customer withdrawal leaves the invoice unpaid until you collect another way. For your own scheduled transfers, a low source-account balance can leave less money available for payroll, inventory or bills. Set the transfer date around your actual cash needs, and leave enough funds in the account being debited.

What you can actually change

You control the amount, schedule and account used for an AFT. Those choices affect when money leaves or reaches your account, even though they do not change ACH processing rules or the provider's fee schedule.

• Set recurring collections for a date that gives you time to address a failed payment before a bill is due.
• Keep a minimum working balance in accounts used for scheduled withdrawals.
• Compare standard and faster transfer options by their stated arrival date and fee before selecting a method.
• Record each transfer's scheduled date, amount and status so you can match deposits to invoices.

1. 01
   Map your schedule. List each recurring transfer, its amount, source account and expected processing date alongside the bills it supports.
2. 02
   Check transfer costs. Review the fee and estimated arrival time shown for each available transfer speed before you enroll.
3. 03
   Track failed payments. Match scheduled customer withdrawals to invoices and follow up promptly when a payment does not arrive.

Frequently asked questions