Same-Day ACH & FedNow for Settlement Disbursements
Electronic payment rails eliminate check-clearing delays from settlement disbursements. Understanding how same-day ACH and FedNow work helps firms plan a faster disbursement process. Today, Disbo funds payees electronically via Disbo Quick Pay (2–3 business days) and Disbo Standard Pay (4–7 business days), with instant real-time rails on our roadmap.
What are the fastest ways to disburse a settlement electronically?
As industry payment concepts: FedNow settles in seconds around the clock, same-day ACH settles the same business day when authorized before the cutoff, and standard ACH settles the next business day — all faster than paper checks, which take 3–5 business days to clear after mailing. Today, Disbo disburses electronically via Disbo Quick Pay (2–3 business days) and Disbo Standard Pay (4–7 business days), with Paper Check via Lob (7–10 business days) for payees without banking information. Instant real-time rails are on our roadmap.
Payment rails compared
How the major U.S. payment rails compare as industry concepts. Disbo currently disburses via Disbo Quick Pay (2–3 business days), Disbo Standard Pay (4–7 business days), and Paper Check via Lob (7–10 business days); instant real-time rails are on our roadmap.
| Rail | Settlement speed | Availability | Best for |
|---|---|---|---|
| FedNow | Seconds | 24/7/365 | Maximum speed; same-day client funds |
| Same-day ACH | Same business day | Business hours, cutoff times apply | Most payees; broad bank coverage |
| Standard ACH | Next business day | Business hours | Cost-efficient; universal bank support |
| Wire transfer | Same day (if before cutoff) | Business hours | Large amounts; international payees |
| Paper check | 3–5 business days + mailing | Business hours only | Payees without banking information on file |
FedNow: how instant payments work
The Federal Reserve launched FedNow in July 2023. It operates as an always-on instant payment service: when a law firm initiates a FedNow disbursement, funds move from the IOLTA trust account to the payee's bank account in seconds — not hours, not the next business day.
For PI law firms, this means a client's net proceeds can arrive the same day a settlement disbursement is authorized — including on weekends, when a client calls urgently because the settlement has just closed and their mortgage payment is due Monday.
FedNow requires both the sending bank (the firm's IOLTA custodian) and the receiving bank (the payee's bank) to be enrolled in the FedNow network. Enrollment is growing — as of 2025, hundreds of institutions participate. For payees at non-enrolled banks, same-day ACH is the next fastest option.
Same-day ACH: broad coverage, business-day speed
Same-day ACH is available at virtually all U.S. commercial banks and credit unions. Payments authorized before Nacha's morning or afternoon cutoff times (currently 10:30 AM ET and 2:45 PM ET for the main windows) settle that afternoon. This makes same-day ACH the most practical electronic option for multi-payee disbursements where some payees may not have FedNow-enabled banks.
In Disbo, a single disbursement run can fund every payee electronically via Disbo Quick Pay (2–3 business days) or Disbo Standard Pay (4–7 business days), with Paper Check via Lob (7–10 business days) for any payee that cannot receive electronic funds. Instant real-time rails are on our roadmap.
ACH and FedNow are fully IOLTA-compliant
Switching from checks to electronic payments does not change IOLTA compliance obligations — it only changes how fast funds reach payees. The trust accounting requirements remain identical: every disbursement must be recorded in the ledger against the matter sub-account, the trust account must reconcile monthly, and documentation must be retained per bar rules.
Disbo posts every disbursement to the IOLTA ledger automatically in real time. There are no manual ledger entries required. See the full IOLTA compliance guide for state-specific requirements.
Also in this guide: Disbursing without checks · Disbursement timeline · How firms disburse a settled case today · Full guide hub →
Same-day ACH & FedNow FAQ
Same-day ACH is an option within the ACH payment network that settles transactions within the same business day rather than the standard next-day timeline. For settlement disbursements, same-day ACH allows the firm to authorize payments in the morning and have payees — clients, medical providers, co-counsel — receive funds in their bank accounts by that afternoon, compared to the next business day with standard ACH.
FedNow is the Federal Reserve's instant payment network, launched in 2023. Unlike ACH (which settles in batches during banking hours), FedNow transactions settle individually in real time — typically within seconds — 24 hours a day, 7 days a week, including weekends and holidays. For settlement disbursements, this means a firm can authorize payment on a Friday evening and the client's funds arrive that night.
Yes. Both ACH and FedNow are accepted payment methods for disbursements from IOLTA trust accounts. The method by which funds leave the trust account does not change the accounting requirements — each disbursement must still be recorded in the trust ledger against the matter sub-account, and the trust account must maintain the same three-way reconciliation regardless of payment rail. Disbo posts every disbursement to the trust ledger automatically.
Most U.S. bank accounts can receive ACH payments — nearly all checking accounts at commercial banks, credit unions, and online banks support it. FedNow requires both the sending and receiving financial institution to be connected to the FedNow network; not all banks are enrolled yet, though the network is growing rapidly. For payees whose banks are not FedNow-enabled, same-day ACH or standard ACH is the next best option.
Yes. To receive an electronic payment, the client (and each payee) must provide their bank account number and routing number. Collecting this information before settlement closes — at intake or during case management — eliminates a step that often delays electronic disbursement. Disbo stores payee banking information securely for use at disbursement without requiring re-entry.
Every payee funded electronically.
Disbo disburses via Disbo Quick Pay (2–3 business days), Disbo Standard Pay (4–7 business days), and Paper Check via Lob (7–10 business days) — in a single authorized run.