How often do you update financial institution directories? Here’s what Nacha recommends

To keep your ACH payments flowing smoothly, Nacha advises businesses to update financial institution routing number validation tables at least monthly.

That may mean more work for your A/P team, but it ultimately means less stress for them because they won’t have to handle as many investigations into vendor ACH payments that don’t go through.

Routing numbers can change when there’s a banking merger or acquisition and even established institutions can get new or additional routing numbers. Also, these nine-digit numbers can be retired when no longer needed (for example, when a bank fails and is forced to close).

Newly established and legitimate routing numbers that fail payment validation because they’re not recognized can quickly strain a businesses relationship.

Bottom line: It’s important that your company’s directories that match financial institutions with their routing numbers are kept completely up to date.

Avoiding rejected ACH payments

Nacha offered these tips for keeping current:

• Keep in mind that banks are able to automate routing number updates for FedACH (Federal Reserve financial services network) participants directly from the Federal Reserve. Call 888-333-7010 for more information.
• Call your originating depository financial institutions for assistance.
• Contact LexisNexis Risk Solutions company Accuity. It’s the official registrar for the American Bankers Association, so it’s their job to stay on top of new and changing routing number information.

More Nacha news

Because so many businesses send micro entry payments of less than $1, along with an offsetting ACH debit, as a way of verifying a payee’s account or an individual’s access to an account, Nacha felt the need to roll out some rules updates regarding official definition, standard practices and formatting.

For example, micro entries must include “ACCTVERIFY” in the company entry description field. The company name must be recognizable to the receiver and be the same, or at least similar, to the company name that will be used in future entries.

The rationale is that it enables originating depository financial institutions to better apply processing routines or other controls to prevent fraud. The institutions are not required to review, validate or correct an originator’s formatting.

Also, originators of micro entries must use “commercially reasonable” fraud detection, including monitoring of forward and return volumes of micro entries. You may need to huddle with I.T. to determine if you’re in compliance.