OF MANAGEMENT AND BUDGET
CLEARINGHOUSE (ACH) PAYMENT PRE-NOTIFICATION
DIRECTORS OF ADMINISTRATION AND CHIEF FISCAL OFFICERS FOR INFORMATION
C. BURROWS PHONE: (609) 984-5217
This circular letter
sets forth information to be used by agencies when processing off-line
payments that will employ the Automated Clearinghouse (ACH) method of
payment. The National Automated Clearinghouse Association (NACHA) has
made the pre-notification time for ACH payments optional. This circular
letter formally establishes the State's policy to continue to use the
pre-notification period and further to set that period at six work days.
These standards should be adhered to by agencies in developing off-line
The following terms are defined as they are used in the context of this
Clearinghouse payment - An electronic payment made directly to the bank
account of the vendor.
period - The number of days that must elapse from the time a vendor
is first registered as an ACH recipient to the time an ACH disbursement
will automatically be generated for that vendor. The pre-notification
period allows for a zero-dollar ACH record to be processed through the
banking system for the vendor prior to the transmission of a true dollar
payment. If any processing errors occur with the zero-dollar record,
the bank will notify the State of the required corrections so that no
subsequent dollar amount ACH payments will fail for that vendor.
C. Off-line system
- A subsidiary payment system maintained by an agency to permit the
generation of certain vendor payments and that is subsequently reflected
in the New Jersey Comprehensive Financial System (NJCFS).
the National Automated Clearinghouse Association has made the use of the
pre-notification period for ACH payments optional to users, the State
of New Jersey has elected to continue to utilize the pre-notification
period with all new ACH vendors.
B. The period
recommended for pre-notification when establishing new ACH vendors is
six workdays in both NJCFS and related off-line systems.
C. Agencies that
are presently utilizing off-line payments should ensure that the provision
for the pre-notification period is a part of their procedures.
D. Agencies that
are in the process of designing off-line payment systems should adhere
to these guidelines when developing those systems.
Charlene M. Holzbaur