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Posted on SEP 5, 2017

What to know about Same Day ACH Phase 2

Beginning September 15, your business will have another opportunity to use Same Day ACH processing. The second phase of Same Day ACH will help your business improve cash flow by collecting payments faster. This is made possible as a result of an ACH rule change, adopted by the National Automated Clearinghouse Association (NACHA), allowing you to initiate ACH debits to receive funds the same day. Same Day ACH processing is available in phases to allow all parties to acclimate to a faster processing environment.

Timeline

  • Phase 1 – September 23, 2016 (COMPLETED): Included credits (payroll and payables) with funds required to be available in the recipient's account at the end of their receiving depository financial institution's (RDFI) processing day.
  • Phase 2 – September 15, 2017: Includes both credits (payroll and payables) and debits (receivables and rent collection) with funds posted to the recipient's account at the end of RDFI's processing day.
  • Phase 3 – March 16, 2018: Includes both credits and debits with transaction posting required by the RDFI at 5:00 p.m. local time.

Same Day debit applications

Now that participants are familiar with Same Day credits (payments), it's time to consider how to use Same Day debits (receivables). Many businesses ship goods upon payment – a process that they can now control with a Same Day debit. Customers wishing to avoid late fees, interest, or interruption of service can authorize a business to debit their account the same day.

The details

There is a $25,000 per entry limit on Same Day ACH. The limit applies to individual transactions, not files. Dividing a higher‐value payment to any one payee into two or more separate transactions to get around the limit is not allowable.

With the availability of Same Day debit, it's crucial to pay attention to your file dates when originating ACH. Consumers (receivers) can dispute a transaction if they feel the date the transaction is received is not what they agreed to. If they dispute a transaction and it is returned to you as “unauthorized,” even if it's for the date you agreed upon, a new written authorization must be obtained.

“If you create ACH files with a software package, you may need to work with your software provider to be sure files you intend to process with next‐day ACH are not unintentionally entered as Same Day ACH,” says Jennifer Hurley, AAP, Vice President, Payment Operations Manager at Johnson Bank. “You must clearly identify Same Day ACH payments by specifying ‘same‐day effective date’ in the file header. Also, make sure files that should be processed with next‐day ACH do NOT have today's date in the file header.” Note: In order to process as a Same Day ACH, your Same Day transactions must arrive to the bank for processing no later than 11:30 a.m. CT.

Be prepared

The September implementation date of the second phase is fast approaching, so now is the time to get ready. To help your business be prepared, utilize the checklist below.

  • Evaluate opportunities to originate same‐day collections. Consider rents, dues, installment payments, outstanding invoices, and other consumer‐to‐business or business‐to‐business receivables.
  • Find out whether your financial institution will offer Same Day ACH Debit origination starting September 15. Johnson Bank is already offering Same Day processing for credits and will offer debit origination.
  • Sign up for Same Day ACH. Since Same Day ACH has a different risk profile and pricing schedule than traditional ACH, you'll need to work with your financial institution's treasury management representative.
  • Set up your accounts receivable system to handle Same Day ACH. The “effective date” will be far more critical than it has been in the past.
  • Be ready to receive same‐day ACH debits as of September 15. Determine how to post to internal accounts for payments received or, in the case of a debit to your account, reflect debits as of the settlement date.
  • Analyze the potential impact on cash forecasting.
  • Be prepared to manage your intraday liquidity more closely. You may receive Same Day ACH debits at the end of the processing day which could be in the middle of the night. Put plans in place to avoid overdrafts. A sweep arrangement will be more beneficial than ever.

Get started today

If you'd like to learn more about Same Day ACH or how Johnson Bank can help your business enroll, contact your Treasury Management Relationship Manager today. For additional details, review our Same Day ACH FAQs library.


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