Online bill payments and e-transfers are likely a regular part of managing your day-to-day personal financial life. Whether paying your friend back for dinner with an Interac e-Transfer® or paying your monthly cell phone bill from your bank app, using digital technology to move money means more convenience, saved time and less paperwork.

As an entrepreneur or small business owner, you’ll use both of these online payment tools while running your company too. However, there is another option for online payments you might not know about—Electronic Funds Transfers, or EFTs.

Mariia Khriachtcheva, ATB’s director of payments, says many small business owners are not familiar with EFTs until a larger vendor or partner asks to use an EFT to move money. It’s no surprise EFTs are a tool of choice since they are easy to use, secure, reduce paperwork, and increase operational efficiency for businesses of any size.

What are EFTs?

An EFT is a transfer of money from one bank account to another electronically. EFTs can occur within a single financial institution or between different institutions.

“EFTs are similar to cheques. They are near real time transfers of funds,” says Khriachtcheva.

Where can you use EFTs? Think of all the ways you use cheques to run your business. EFTs can likely replace all of these use cases. You can pay employees, suppliers, vendors, freelancers, or make rent payments with EFTs. Like cheques, you can set up EFTs with your bank to clear on a specific date in the future.

“They are good for transactions between zero and $50,000 dollars,” adds Khriachtcheva. “It seems to be the sweet spot for how small businesses use this payment type.” Technically, there is no limit for these transactions, so you could send more than $50,000 if you needed to.

With EFTs, you can also collect money. This is known as direct debit.

“If your business collects monthly membership fees, like a yoga studio, or collects rent payments, you’re a great candidate for the adoption of the EFT service,” she says.

EFTs can be set up to automatically take payments—with the other party’s consent, of course.

EFTs can help you be more efficient

Using EFTs helps business owners be more operationally efficient. It eases administrative management because you don’t need to write individual cheques or keep track of the cash in your account day-to-day to ensure no cheques bounce. It helps save time at the start of every month since you won’t need to chase customers to pay their fees on time.

To set up an EFT, you’ll need specific information from the individual or business where you’ll be sending or receiving transactions. You’ll need:

• Their bank name or three-digit bank number
• The five-digit transit number
• Their account number, which is 6–12 digits.

With this information, you’ll add a person or a business to your account only one time and then you can send or receive money with them any time it’s necessary in the future.

Cheques versus EFTs: How much do they cost a small business?

“With cheques, the costs can be a little buried,” says Khriachtcheva. “A business cheque book costs a few hundred dollars. Then you need stamps to send the cheques to your vendors, staff or suppliers. Before any payments are even made you’ve spent $2–$3 per transaction.

Plus, there are possible charges for insufficient funds if a cheque gets cashed unexpectedly.