This appendix contains the following topics:
Direct Deposit Processing Introduction
There are three ways of handling payments to vendors in Accounts Payable:
| • | Writing a check and sending it to the vendor. This is the traditional means and has been in PBS for many years. |
| • | Positive Pay Processing: Write a check, send it to the vendor and you also notify your bank of the checks that are expected to clear. The positive pay file is generated during a check run. You transmit this file to your bank. If a check is received by your bank that is not in the positive pay file, the bank should not clear the check. |
| • | Direct Deposit ACH file Processing: In lieu of writing checks, the program creates a file, of a specific format, that you transfer to your bank. Your bank then deposits the pay amount directly into each vendor’s bank. |
Both Positive Pay and direct deposit ACH processing can be used at the same time in Accounts Payable. If you are using both, there would be a combination of some vendors receiving payments via check and others via direct deposit ACH. You may also use one or the other by itself.
The implementation of Positive pay and direct deposit ACH processing is documented in this appendix.
Positive pay is notifying your bank via a file of the checks that they will expect to clear in your bank account.
A positive pay file can be created when:
| • | Running print checks and post |
| • | Posting payables and there is a non-A/P check or immediate check as one of the entries posted |
| • | Posting following the entry of a manually paid item in Open items - Modify |
| • | Running the Non-AP/Manual check register posting report |
In A/P you can design a custom positive pay file. This file can be a comma delimited (CSV) or text file format. This file gets created during a check run or when posting payables that have immediate checks.
All positive pay processing is contained within PBS, except the actual transmission of the positive pay file to your bank.
There are bank qualifications and information needed to implement positive pay.
| • | Contact your bank to determine their requirements for positive pay processing. |
Ask them for the file specifications. This must include the fields that are required for the positive pay file.
You must determine the file type that is required. PBS A/P can produce fixed length (tab-delimited) text or comma delimited (CSV) file types. CSV is an abbreviation for Comma Separated Values.
You will also need to know the method that they want you to submit the positive pay file. It may require that you upload the file via the Internet to a secure web site. This will probably require a login and password which the bank will provide.
It is highly recommended that you transmit the positive pay file to your bank before your bank receives the checks documented in the file. You should talk to your banker about their policies regarding this.
| • | In order to set up your company’s Positive Pay information, you will need the routing number of your bank, your bank account number and Federal Tax ID number. |
Once you have the information needed you may start the implementation process for A/P positive pay.
You must design a positive pay form based on your bank’s specifications. Please see the Positive Pay File Forms chapter for more information on setting up a form. For a description of each selectable field, see the Positive Pay Form Fields appendix.
You may test the file generation. Before you test the form you should first complete step 2 and 3 of the bank setup. During the test you will be asked to enter a bank.
Check the Generate positive pay check box field in the A/P Control information so that the positive pay feature is active.
If you turn this field on to test the positive pay per step 1, later, when you do a check run and if the positive pay implementation is not finished, turn it off before you print checks.
This step is done under the menu selection CTL > Banks.
A bank record contains information required for positive pay processing: bank name and your bank information. You must also enter the positive pay format created in step 1. There must be a bank code set up for your bank that has a bank type of:
Company ACH bank
The company ACH bank is your bank. Enter the fields that pertain to positive pay.
You may use multiple bank accounts. However during a check run you can only use one at a time. The bank used is based on the cash account selected during print checks and post.
For information on entering a bank, see the System User documentation chapter Banks.
Now you are ready to enter payables, prepare the payments and print checks and post. During the check printing process a positive pay file is generated. See Prepare Payments / Checks and Direct Deposit
Following print checks and post you may now send the positive pay file to your bank.
When processing Direct Deposit payments it creates a file of a specific format that you send to your bank. This file contains the information necessary for paying your vendors electronically. Your bank then deposits the pay amounts directly into the vendor’s bank account.
You are dealing with two bank types when using Direct Deposit processing:
| • | You need at least one Direct Deposit company bank must be entered. This must contain the bank account information where you do your banking. Your bank must accept the standard ACH (Automated Clearing House) format. |
| • | You must also enter the vendor Direct Deposit banks. The number of vendor Direct Deposit banks is only limited by the banks that your vendors use. Each vendor can have their payments sent to one bank account. |
Each unique bank is set up in the CTL menu selection of Banks. Following that the appropriate bank code is entered in the vendor record in the vendor bank fields; see Vendor Setup for Direct Deposit Payments. Additional information is also entered, including the vendor's bank account number.
The first time a vendor is set up for Direct Deposit processing, an ACH file may be set for a pre-notification status. Pre-notification is used by your bank to verify your vendor’s bank account information. There is more on the pre-notification status later in this appendix.
Once the Direct Deposit processing setup is complete, an ACH-formatted file is generated during a pay run using the Print checks and post menu selection. The ACH file must be transmitted to your bank.
There are bank qualifications and other information needed for an Direct Deposit system to work.
| • | Contact your bank to determine their requirements for Direct Deposit processing. Many banks have the capability to process an ACH file. But, your bank may prefer to forward the file to the Federal Reserve System for Direct Deposit processing. PBS can provide the set up for either case. You will need this information when setting up the bank record. |
Let them know that the software has a pre-notification feature that allows you to produce an ACH file that they may use to verify your vendor’s bank account information.
Find out the file type they want you to use when generating the ACH file. Do they want Carriage returns and Line feeds (Windows-DOS text file format) at the end of each line or just Line feeds (UNIX/Linux text file format)? If they do not know, send them a test ACH file to verify that they can read it properly. There is a field in the bank record that determines if the Carriage return and Line feeds are created. If you are not sure which is correct, use the operating system default.
You will also need to know the method that they want you to submit the ACH file. It may require that you upload the file via the Internet. This will probably require a login and password which your bank contact will provide.
| • | In order to set up your company’s Direct Deposit information, you will need your bank routing number, account number and Federal Tax ID number. |
| • | Determine which vendors want to receive their payments via Direct Deposit. For those participating you will need their bank name, ABA routing number and checking or savings account number. |
Let the vendor know that, in the future, if they change their bank or bank account number they must notify you as soon as possible. Otherwise their may be a delay on receiving a payment.
Once you have the information needed you can start the implementation process for A/P Direct Deposit processing.
Direct Deposit Processing requires that the first time a vendor is set up to deposit a payment into their bank account, or any time a vendor's bank account number changes, a pre-notification (pre-note) process is initiated.
A pre-note indicator is defaulted for each pre-note vendor’s bank account in the ACH file either during the normal check printing cycle or when running the Pre-note ACH file and report program. See in the A/P Pre-note ACH File and Report section in the Vendors chapter.
A pre-note record has no associated dollar amounts and is sent to the processing bank to verify two sets of information:
1. The vendor's bank has the correct bank routing number.
2. The vendor's bank account number is valid.
In order to implement Direct Deposit processing, certain control records, tables and vendor information must be set up.
The set up of Direct Deposit processing requires specific information about the company, processing and receiving banks and the vendors. This information includes each bank routing number and the vendor's bank account number. Both numbers are usually found at the bottom of a check or deposit slip.
The following steps are needed to send an ACH file, including vendor pre-note records, to your bank:
This step is done under the menu selection CTL > Banks.
A bank record contains information required for Direct Deposit processing: bank name and bank ABA routing number. There must be a bank code set up for each bank that will receive a vendor deposit (the receiving bank), plus a unique deduction code for the Direct Deposit processing bank.
There are two types of banks; ACH only and Company ACH.
ACH Bank
An ACH bank is for vendors (and employees if you are using ACH direct deposit processing in Payroll). Multiple vendors (and employees) may bank at the same location. That is why the bank information for Direct Deposit processing is entered in a central location.
Company ACH Bank
The company bank is your processing bank. There must be at least one company bank. Each company bank must have a unique bank account number.
A company bank can also be an ACH bank as one or more of your vendors may bank at the same location as your company.
For information on entering a bank, see the System User manual chapter Banks.
A remittance advice form is printed and sent to your vendor to let them know that a payment has been made. During the Print checks and post payment process, you will be prompted to select a remittance form of your own design.
You may design your own remittance or copy a check or other remittance form and modify it to become the design that you want. Please see the Check and Remittance Forms chapter for more information on creating a remittance form. For a description of each selectable field, see the Check and Direct Deposit Remittance Form Fields appendix.
You must enter in CTL > Cash accounts the transaction number for processing ACH records. This is done in field Last AP ACH #. When you enter 1000 in this field, next transaction number will be 1001.
There is one field in the A/P Control information that must be set. It is Generate ACH. Set this to Y for character and check the box for graphical.
Enter the information on vendor Terms tab for vendors participating in direct deposit.
When you set up each bank account information, for the first time, or change it at any time, it will default to a pre-notification status.
Please see the Vendors chapter Vendor Setup for Direct Deposit Payments section for information on each field.
You must create an ACH file with the pre-notification ACH records by running the A/P Pre-note ACH file & report found under the Utility menu. For more information on running this utility, see the A/P Pre-note ACH File and Report section in the Vendors chapter.
Send the ACH FILE to the processing bank per your banks submission requirements.
For ACH file location information read the File Name, Path and Backup section in this appendix.
Update Pre-note Status
After the ACH file vendor pre-notification bank information has been determined to be satisfactory by the processing bank, you can either update the vendor’s bank account status to normal manually through Vendor Pre-note field, or you can run the Pre-note ACH file and report again which has an option to update one or more vendors from the Pre-note status to the normal status. For more information on running this utility, see the A/P Pre-note ACH File and Report section in the Vendors chapter.
Normal ACH Check Run
With an ACH normal status the vendor's next selected voucher(s) will be included in the generated ACH file during Print checks and post. Send this file to your bank where it will be processed so that payments are sent to your vendor’s bank electronically.
Your bank may require the vendor go through the pre-notification process each time a change is made to the bank or bank account number. If there are subsequent changes to the vendor bank information and you made those changes, the status will again default to pre-notification.
When you must make changes to the vendor bank information or if you are adding a new ACH vendor you should go through the following steps.
First do these data entry steps:
a. Review the information received from the vendor regarding their bank account and account type.
b. Determine if the vendor's bank is set up in CTL > Banks. If not, assign new bank codes.
c. Go into the vendor's record Terms tab in graphical, screen 3 for ACH processing in character, and enter the bank code, bank account number and account type. During the entry the pre-notification status defaults to checked or Y. This means that the account has not been approved for direct deposit processing yet. If you know that account is approved you may enter it now.
Run the Pre-note ACH file & report to create an ACH file with pre-note records. For more information on running this utility, see the A/P Pre-note ACH File and Report section in the Vendors chapter.
|
Note |
The following occurs during Print checks and post when you select to print checks and generate an ACH file both on the same run in relation to the pre-notification status pre-notification data on the vendor record.
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Send the ACH file to the processing bank per your banks normal submission requirements.
After you have received the pre-notification confirmation verification from the bank, update the vendor Prenote field (#34 in character) to remove the pre-notification status by changing the field to N (unchecked). The vendor’s next payment will be written to the ACH file.
You may run the Pre-note ACH file & report to automatically update the status to N for multiple vendors
The direct deposit ACH file and positive pay file is generated when running Print checks and post. A direct deposit ACH file can also be generated when running Pre-note ACH file & report.
The conventions for generating ACH and positive pay files are similar. In this section of the documentation the ACH file name, path and backup is explained. In the cases where positive pay is different, it will be noted.
An ACH file contains information about your account, your bank and also contains vendors who have either a normal ACH account status or are set up for pre-notification. For an explanation of each field for each record in the ACH file, see the Direct Deposit ACH File Specifications appendix in the PBS Administrative documentation.
There are two files created during each ACH run. There is a main file and the backup file.
Primary File
The ACH file name and path are entered on screen 2 Field 7 in the Ctl Banks menu selection (field 9 for Positive pay). The default is APACH\APACH00B0001.TXT (Positive pay default is POSPAY\APPOS00B0001.TXT), however you can enter a path and file name of your choosing. The directory must exist or the path cannot be entered. Never delete that folder or the files will NOT be generated.
An existing primary ACH file will be overwritten each time you do a ACH pay run or when you run the A/P pre-note ACH file and report utility.
Backup File
The backup file is written at the same time and to the same directory as the primary ACH file as defined in Banks. Each backup file has a different name for each check run and serves as a security copy because it is not overwritten during consecutive check runs or when running the A/P pre-note ACH file and report utility.
The backup file name, represented by APYYMMDDCCBILBK.ACH, has the following meaning:
|
Part of File |
Description |
|
AP |
Represents the Accounts Payable module |
|
YYMMDD |
Date of the pay run - Year, Month and Day |
|
A |
In order to prevent the backup file from being overwritten if more than one check run is done on the same day, the file name is incremented alphabetically A, B, C, D, etc. However once the file name gets to Z (26 files in one day), it will start over with A again on the 27th check run and delete the previous A file. |
|
CC |
This represents the company number. |
|
BILBK |
The “B” means that the bank number follows. The bank number may be 1 to 4 characters. In the example it is ILBK which is four characters. If your bank number is “A” then it is one character. If the bank number is all numeric like “1”, it writes 0001 to the file. |
|
.ACH |
This is the extension and it indicates that is a file that contains ACH information. |
The backup file contents are the same as the main ACH file. Therefore, if your main ACH file gets overwritten, you can rename the backup to the name your bank expects and submit that file to your bank.
Both the ACH file (path and name) and the backup file path and name are printed on the ACH Register and on the A/P pre-note ACH file and report utility report.
There is no purge function for the ACH file backups. You may want to delete them manually on a regular basis.
An ACH backup file contains confidential payment amounts for vendors. It is recommended that access to the ACH directory be restricted to the person or persons producing and transmitting the ACH file.