We’ll use net payroll origination as a simple example to show how ACH The ACH is a network of regional associations, inter-bank associations, and private-sector processors. ACH payments are processed and settled electronically, thereby increasing reliability, efficiency and cost effectiveness. ACH payments are generally settled in one day or greater. is used.
First, the employees within a company are added as participants, using the Participant The participant is the individual or organization that will be affected by the ACH transaction (payee or draftee). An ACH transaction may debit or credit a participant's account, e.g., a payroll deposit or a payment for services rendered. The participant information is referenced by the ACH transaction. Maintenance screen.
Next, a template The template contains the essential characteristics of the ACH batch, such as the name of the template, the type (class code) of ACH transmission (CCD The ACH payment format used for concentration of funds between or within companies. A single 94-character record contains the standard entry class indicating the type of transaction, routing and transit numbers of the ODFI Originating depository financial institution, The FI issuing an ACH file(s) on behalf of its client. and RDFI Receiving Depository Financial Institution, the FI that receives the ACH debits or credits on behalf of an individual, or business client. and the originator and receiver account numbers. CCD is the only corporate ACH format that does not have space for additional addenda information, but it does contain space for a reference number. or PPD Prearranged Payment or Deposit, the ACH payment format by which consumers may authorize credits or debits to their accounts by a company or financial institution. These are normally recurring payments in fixed amounts.), and the offset account. Although AXIS Cash Management only lists CCD & PPD, the application will create the appropriate CCD+/PPD+ ACH Batch if a participant with an addendum is associated with this batch. is created using the Batch An ACH batch consists of a template (see below) and a collection of transactions having the same purpose and effective date to be performed, and may also include addenda information. Template Maintenance screen. It is possible that more than one template would be used. For example, if you wanted separate processing for exempt and non-exempt employees.
Now that there’s a template and a set of participants, you can set up an ACH batch by using the Transaction An ACH transaction is an entry within the NACHA file that indicates how the participant's account should be affected. The transaction includes a reference to the participant, how the account is affected, and the amount. Entry Maintenance screen to add transactions (i.e., participants, with account info and dollar amounts) to the template.
The ACH batch is inactive until it is Initiated and the ACH file is created.
To process the net payroll amounts, select the template on the Initiate Batch The Cash Management end user initiates an ACH batch by reviewing the transfer information and assigning a settlement date. Once all of the information is deemed correct by the user, the system creates a formatted NACHA file with all of the batch information. screen, and then review all of the transactions and specify an effective date. When you are satisfied that the information is correct, you would submit the batch. What happens next depends on whether the financial institution a bank, thrift, or credit union is running a manual processing system or an automated system.
· Manual: Business Banking creates an ACH file immediately, and then sends an email message to the financial institution, indicating that an ACH file has been submitted for their approval and subsequent processing. The financial institution manually downloads the file, evaluates and processes it. If you are required to prefund your ACH credit batches, the batch will be pending at your financial institution until funds are verified and an FI Administrator has approved the batch.
· Automated: The ACH batch transactions stay in the database until the scheduled "collection" job occurs. The scheduled job collects all approved ACH transactions from the database, creates a file and transmits it to the financial institution’s real-time ACH server. If you are required to prefund your ACH credit batches, the batch will be pending at your financial institution until funds are verified and an FI Administrator has approved the batch.