Vendor Checks - Electronic Funds Transfer

The Fund Accounting System's Electronic Funds Transfer (EFT) feature lets you process vendor payments without printing physical AP checks. For EFT vendors, the system generates an Automated Clearing House (ACH) file as part of vendor check processing.

The ACH file is formatted according to a template you select based on requirements from the bank that handles your AP account. You send the ACH file to your bank which then distributes funds electronically to the appropriate vendor bank accounts. The vouchers print in the same format as the AP checks, with the addition of including the message NON-NEGOTIABLE. The system can also send e-mail notifications with payment information to the vendors.

In terms of day-to-day data entry, the EFT feature requires little added work for personnel entering payable records or processing vendor checks. EFT-related processing occurs seamlessly when the correct reference table setup is in place.

This section provides information on settings that classify a vendor payment for EFT processing, the formatting for the ACH file generated from processing EFT transactions, and creation of prenote information your vendors' banks use to test bank account data before actual money transfers.

EFT Payments and AP Check Processing

To process a payable as an EFT transaction, the following criteria must be met during a vendor check run:

1. The payable's vendor must have information in the following Vendor List fields: Trans(action) Code, Bank Code, and Account Number.

2. The Vendor's Trans(action) Code must be either 22 - Checking Credit or 32 - Savings Credit.

3. The Payable's Print Check field must be clear.

4. The AP check run's Payment Type must be either A - All or E - EFT Only.

5. The check run's additional selection criteria must include the payable.

Bank Destination and the ACH File

As part of the setup for a vendor check run, the system prompts you to select a Bank Destination in the Electronic Funds Transfer (EFT) page. In the Bank Destination field, select the file format template set up for the bank where you will send the ACH file the system creates. You will be prompted separately for each disbursement fund included in the check run. This way, you can determine ACH file format on a fund-by-fund basis.

The file format templates are defined in the EFT Destination table based on instructions from the banks handling the accounts you use for vendor payments. The Bank Destination ensures that the ACH file contains the data and formatting required by your bank according to its information needs and standards established by the National Automated Clearing House Association (NACHA).

The ACH file includes the following details for the payments made to EFT vendors included in an AP check run:

• Information for the bank account supplying funds to cover the total payment.

• Bank account information for each vendor receiving payment.

• Code indicating how your bank will handle the debit to your account.

Depending on setup in the EFT Destination table, the system may require that you select a Bank Destination defined for the disbursement fund you are processing in your AP check run. In this case, the Bank Destination description must indicate the appropriate fund. If it is not clear which record to select, consult the administrator at your site who set up the EFT Destination table.

Email Notifications

In addition to printing payment vouchers and generating ACH file data for EFT transactions, the system can also automatically send email notification to the appropriate vendors to inform them you are submitting your payments.

The system attaches the payment information to the email. However, your network's mail server must be set up for this feature. To verify if the server is configured properly, contact your system administrator.

For the system to send notification to a particular vendor, the appropriate reference table setup must be in place in the Vendor List and EFT Destination table. To determine the content of the email, the system refers to the EFT Destination record you select in the Bank Destination field when setting up the check run. This record defines the subject line, return email address, and message body for the email sent to each vendor included in an ACH file.

To determine whether the vendor receives notification, the system checks the Vendor List record to see that an email address is defined in the A/P Email field and the Email Voucher Confirmations checkbox is selected. If these criteria are met, the system sends the notification with an attachment showing the payment information. Notification is not sent for prenote transactions.

For additional information, refer to Send EFT Email Notifications.

Prenote Transactions

Based on Vendor List setup, you can generate prenote data for verifying a vendor's deposit information. The data is included in the ACH file with a transaction code indicating you are not making an actual payment but are instead performing a test.

The following Vendor List Trans Codes designate the vendor for a prenote transaction:

34 - 1st Savings Prenote - Creates first savings account prenote when EFT transactions are processed in a check run.
33 - 2nd Savings Prenote - Creates final savings account prenote when EFT transactions are processed in a check run.
24 - 1st Checking Prenote - Creates first checking account prenote when EFT transactions are processed in a check run.
23 - 2nd Checking Prenote - Creates final checking account prenote when EFT transactions are processed in a check run.

You cannot generate an EFT payment for a vendor until the Trans(action) Code is either 22 - Checking Credit or 32 - Savings Credit. Vendors with prenote transaction codes are automatically included in the ACH files generated from a check run with a Payment Type of A - All or E - EFT Only.

When prenote data is created for a vendor with a transaction code of 24 or 34, the system moves the vendor to the next transaction code of 23 or 33, as appropriate. This means prenote information must be created and sent to your bank one more time before the vendor can have EFT payments processed.

When prenote data is created for a vendor with a transaction code of 23 or 33, the system moves the vendor to transaction code 22 or 32, as appropriate. Future payables for the vendor may then be processed as EFT transactions.

Important

If you have no vendors in the Vendor List that are ready for EFT transactions (that is, no vendor has a transaction code of 22 or 32), then the system can only produce ACH prenote data for a check run with a Payment Type of A - All. As an alternative, you can also run the EFT Prenotes option.

Remember, the vendor's transaction code is automatically updated when you generate prenote data for that vendor. EFT payments can be made to the vendor as soon as the transaction code is either 22 or 32.

Therefore, make sure you leave adequate time between creating final prenote data for a vendor and processing payments to the vendor in an AP check run. That way, you have a chance to verify the vendor's information with the bank handling your EFT payments.

Also, if you plan on processing your EFT payments separately from regular vendor checks, you must run the C - Checks Only payment type first, then use the E - EFT Only payment type. Doing the opposite can cause a problem if you want to process a check for a vendor with a transaction code of 23 or 33.