Do You Know the rules?

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Pat A. McDavitt
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• Article Title: Do You Know the rules?
• Author: Pat A. McDavitt.
• Word Count: 582

Article Start

Do You Know the Rules?
What you NEED to know about your use of the ACH
Your failure to understand the rules could result in fines of $10,000 per month until the problem is resolved!

Using the ACH is a powerful and convenient addition to your receivables management tools. It brings with it some very important responsibilities. You lack of understanding of these responsibilities could result in grave consequences for you and your company.
This article is intended to provide you with the essential information you need in order to operate a successful ACH program without encountering an uninformed failure to comply with established rules which could result in the levying of fines against your company.
The information in the article provides important general information for all ORIGINATORS (your company).
It is vital that anyone in your firm that is connected to acquiring information from you RECEIVERS (those you send debit or credit transaction to), handling that information, in any way, or responsible for interacting with an ACH system, read and understand this information.
As an approved ACH Originator, you have contracted with a Third Party Processor, to transmit transactions through d Clearing House to receiver’s bank accounts.
1. Authorizations: Before transmitting the first debit or credit to a receiver’s account, authorization for each transaction must be obtained in the manner prescribed for the SEC Code (standard entry class) being utilized by the Originator and maintained, available for retrieval upon request by the Receiver (records kept for two years).
2. Timeliness of entries: Each credit entry has to be timely and each debit entry has to be due and owing from the Receiver to the Originator on the settlement date and for a sum specified by the Receiver to be paid to the Originator, or is to correct a previously received erroneous credit entry.
3. Returns: Originators must insure that no entry is made as a reinitiation of an item previously returned by a Receiver’s Bank (RDFI) except in the case of insufficient funds type of returns.
4. Originators receiving correction data (Notice of Change) must update the account information prior to the transmission of the next transaction following receipt of such NOC.
5. Revocations: Originators must warrant that no entry will be transmitted when the receiver has revoked the authorization for such an entry.
6. Notices of Variable Debits: If the amount of the debit changes, the Originator must notify the Receiver at least 10 days prior to the debit.
7. PPD (Prearranged Payment & Deposit Entry): This SEC Code is used for a credit or debit entry to effect a transfer to or from a consumers checking and savings accounts only.
Any transaction targeted at a receiver’s account using the PPD code must have a written, signed authorization.
Article End

C. J. & Tuck Consulting, LLC owns and operates www.cashflownow.org. We specialize in Electronic Payment Processing Services. Pat A. McDavitt, Author Telephone: 512-837-1358 Fax: 512-837-0345

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