What is an Account Receivable Entry (ARC)?

An Account Receivable Entry (ARC) refers specifically to a single-entry debit initiated by an ACH originator. In this context, ARC transactions are used to electronically collect payments from customers' checking accounts. This method is beneficial for businesses as it streamlines the payment process, reduces the costs associated with handling physical checks, and aids in improving cash flow.

Unlike manual entries, which may involve additional steps and potential errors, the nature of an ARC is that it is processed through the Automated Clearing House (ACH) system, allowing for quick and secure funds transfer. Understanding this distinction is vital for professionals in the payments industry, as it reflects the efficiency and automation of modern billing practices.

While the other choices may have their own relevance in accounting practices, they do not accurately encapsulate the specific definition of Account Receivable Entry as understood in the realm of ACH transactions.