Getting Started with NACHA
Overview
A NACHA file is a set of instructions that triggers a batch of ACH payments when uploaded into a bank portal. NACHA file format is the protocol for structuring those instructions in a way that successfully initiates the payments. While the details of each NACHA file may vary from payment to payment, typically each line is 94 characters long and includes critical payment instructions like:
- Account number
- Routing number
- File header and trailer
- Batch header record with service class code
- Entry detail record
While the format is fairly standard, there can be slight variances as some banks will have different requirements. To get started with NACHA, we recommend reaching out to your bank to find out their specific requirements.
Key Questions to Ask your Bank when Implementing NACHA Files
1. Do you require a balanced or unbalanced file?
A balanced ACH file contains both credits and debits - the totals of which offset one another. IMS defaults to unbalanced but can export a balanced file if your bank requires it.
2. Do you need the file to be in a CCD/PPD format?
CCD's are Corporate Credit or Debit transactions and are used to originate transactions to or from Corporate Accounts only. PPD's are Prearranged Payment or Deposit transactions and are used to originate transactions to Consumer Accounts only.
3. Can you process files using a “For Further Credit To” field?
Note that your sending bank may process this field. However, the receiving bank must also be able to process this information.
4. How can we test a NACHA file to determine that it will process correctly prior to attempting to distribute actual funds?
Many banks can process a $0 test file - Is this an option?
If your bank has any specific requirements, please reach out to your CSM or Support Team to determine if we can accommodate these needs.
Once you're ready to set up your entity for NACHA, review the steps below:
The internal entities that are sending the distributions can be found by following these steps:
1. Select Entities on the top navigation panel.
2. Select the arrow next to the desired entity and choose Edit from the drop-down menu.
3. Select the Bank Accounts tab.
4. Select + Add Bank Account:
5. Fill in the information at the top of the form:
To generate a NACHA file, you will need to input the fix fields under the ACH Information section. The first seven fields in this section need to be completed with information provided by your bank; the "Discretionary Data" field is optional depending on the requirements of your bank.
Investors who want to receive payments via ACH should be marked as such in their Investor Profiles with the correct ABA and Account numbers. Incorrect ABA numbers will result in a failed NACHA export. For information on the seven required fields, please see the definitions below:
*If there is any question as to what to include in these fields, please refer to your bank.
ACH Destination
The "Immediate Destination Name", the name of the ODFI (Originating Depository Financial Institution), an example could be "Federal Reserve Bank"
ACH Origin
The "Immediate Origin Name", an example could be "My ABC Bank"
Company Name
The "Company Name." This will be the entity name
ACH Entry Description
The "Company Entry Description." An example could be "Payments"
ACH Routing Number
The "Immediate Destination", ODFI's routing number. Must be 9 digits.
ACH Company EIN
Typically, the 9-digit EIN (enter without any spaces or dashes) for the entity from which the distribution funds will be coming from. If your bank has provided an alternative value that needs to go here, such as an ACH Company ID, that can be entered here as well. These values may be 9 or 10 characters (numbers and letters) but still no spaces or dashes.
ACH Immediate Origin
The "Immediate Origin" is a 9-digit number (no letters, spaces or dashes), which is usually the entity's EIN (same value entered into the ACH Company EIN field). This could also be a 10-digit number (no letters, spaces or dashes) assigned to the Sponsor by the ODFI once they approve to originate ACH files through them. If a 10-digit-number, this is typically a number assigned to be input prior to the company’s EIN (ex. 5xxxxxxxxx).
Discretionary Data
Additional NACHA Notes/Special Circumstances
Wells Fargo Integration
IMS is pleased to offer a consolidated file format to customers using the Wells Fargo Payment Manager within the CEO suite. This file layout allows IMS customers to export one file to process ACH, Wire, and Check payments in lieu of producing a NACHA file for ACH and then handling alternate methods manually.
Setup required for Wells Fargo:
- IMS clients with an existing Wells Fargo relationship and access to the CEO portal should reach out to their Sales Representative or Client Relationship Manager and let them know you want to update your Payment Manager profile to accommodate uploading a CSV file for payments.
- Clients with an existing Wells Fargo relationship that don’t currently have access to the CEO portal will need to discuss setup, pricing, etc. with their Sales representative.
- Wells Fargo will supply an implementation project manager to facilitate activating the appropriate settings for your account.
- Wells Fargo will have a list of questions on how you want to process the files, as well as items needed to ensure your checks are formatted properly.
- Wells Fargo will provide a sandbox environment where you can upload test files to ensure formatting is correct.
- Depending on a client’s complexity, you should expect a 6-8 week time frame from Wells Fargo to complete implementation and begin uploading live distribution files to the Payment Manager System for processing.
For JP Morgan Access and Chase Business Portal Users:
While part of the same company, these are two separate portals (Chase Business Portal and JP Morgan Access) for uploading NACHA files. If using the Chase Business Portal, please note the Company Discretionary Data field is required, and can be accommodated by using the Discretionary Data field under the ACH Information section of the bank account. If this field is not entered, this will not sync with IMS NACHA formatting, as this is non-standard formatting. If you are just beginning to implement NACHA, we advise using JP Morgan Access which has more robust and developed NACHA functionality.