How does the ACH Prenotification work?

Owned by Emma Greenwood
Last updated: Mar 18, 2021

Background

NorthScope has had the ability to allow users to use ACH (Automated Clearing House) to transfer money to Vendor, Fishermen and Tenders’ Savings and Checking accounts instead of writing paper checks for some time now.  However, if the setup information is wrong or it becomes outdated, the bank will reject the transfer.  To help users with this, many financial institutions support a Pre-Notification (prenote) which acts like a test transaction to ensure the account can be verified before any money is actually transferred.  Banks will confirm if the transaction was successful or not so users can start transferring money to that account. 

Prenotes

If a prenote is used, it must be created and delivered to the bank at least three banking days before the first dollar ACH entry for the associated account.  The only difference between the prenote and a regular entry is the credit or debit amounts are either zero or one dollar (depending on the bank requirements) and the transaction code identifies the entry as a prenote.

Setting up a Vendor / Fisherman to send a Prenote

To enable a Vendor or Fisherman to send an ACH Prenote entry, from the ACH master file (located in Purchasing > Configuration and Fisherman Accounting > Configuration menus), add the Vendor, Address ID, Default Payment type will default to Check and choose either Checking – Prenote or Savings – Prenote for the SEC Code, and enter the Bank Account details for that vendor.  If the Vendor/Fisherman is already setup for ACH payments (i.e. the SEC Code is set to Checking or Savings), but their account details have changed for example and a new Prenote is needed, the record can be edited and the SEC Code can be changed to one of the prenote options, and the Default Payment type will need to be set to Check to be able to send the prenote for that Vendor/Fisherman. 

To send the prenote, select one or multiple vendors or fishermen and click the Process Prenote button, this will generate the prenote file in the same way a regular ACH file is generated.  Users will be able to tell if a prenote has been generated for a vendor/fisherman set to a prenote type by looking at the Prenote Sent field, this field will be populated with the date and time the corresponding record has gone through the prenote verification process.   Once confirmation has been received from the bank, users can update the SEC Code from a prenote option to a regular Savings or Checking account type for the account/s that was successfully verified.  If a record that is not set to a Prenote type is selected and the Process Prenote button is clicked nothing will happen for that account.  Users will not be able to make ACH payments to Vendors/Fishermen that are set to a Prenote type account, a manual check would have to be processed until the Prenote has been successfully completed and the account changed to a regular Checking or Savings account. 

Notes:

  • Users will be able to process payments for a Vendor/Fisherman that is setup for ACH payments with the SEC Code set to a regular Checking/Savings account, and are on either an open or posted payment batch, but the ACH File has not yet been generated and then the Vendor/Fisherman ACH record is updated to a prenote type.
  • If a Vendor / Fisherman has multiple Address ID's and one is setup for ACH payments with a SEC Code of Checking/Savings and is the default payee address, and another one is setup with a Prenote type SEC Code. Then a payment is processed for that Vendor/Fisherman, so the address ID set as default payment of ACH is populated on the Process Payments page, if the address ID is updated to the ID that was setup as a prenote type, the default payment option could be changed to ACH before the record is saved, but after printing the payments for that batch and processing the ACH file will result in a blank file being generated since this account is setup as a prenote type.