ARC – Accounts Receivable Truncated Check Entries

November 24, 2009

An ARC entry is a transaction for which the authorization is received in the mail or at a dropbox (can be received via US Mail, Fed Ex, UPS or any other traceable mail)  in the form of a check.  However, before it can be considered for conversion to an ARC entry, the Originator must ensure the check writer was provided with a proper notice of their intent to convert.

In the ARC world, Notice  = Authorization.  The ACH Operating Rules provide specific authorization language for the notice as follows:

“When you provide a check as payment, you authorize us either to use information from your check to make one-time electronic fund transfer from your account or to process the payment as a check transaction.”

OR

“When you provide a check as payment, you authorize us to use information from your check to make a one-time electronic fund transfer from your account.  In certain circumstances, such as for technical or processing reasons, we may process your payment as a check transaction.”

In addition to the above language, until January 1, 2010, the notice must include the following (or substantially similar) language:

“When we use information from your check to make an electronic fund transfer, funds may be withdrawn from your account as soon as the same day you make your payment, and you will not receive your check back from your financial institution.”

The ideal location for such notice is the monthly statement or invoice.  Keep in mind that the authorization notice must be provided in a clear and conspicuous manner, meaning in part that it should not be lost in the fine print.

 Notes:

The Originator must provide an Opt Out method for their customers.  In the event a customer wishes to opt out of the ARC conversion process, the Originator is not allowed to convert any check received from that customer going forward.

The Originator must use a MICR Reading device to capture the MICR information from the check.

To be eligible for conversion to an ARC Entry, besides being received at a lock-box, the check must:

            Contain a pre-printed serial number

            Not contain an auxiliary on-us field

            Be in an amount of $25,000.00 or less

            Be completed and signed by the Receiver

The amount of the ARC transaction must match the face value of the check.

ARC is actually pretty good for any Originator that receives a number of checks in the mail.  If that sounds like you, check it out.

In the meantime, we have one last Standard Entry Class Code that I want to cover, BOC.  I hope to knock it out soon.  Then we can move on to some fun stuff.

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A little break…

November 12, 2009

I wanted to take a short break from SEC Codes.  Don’t get me wrong, I know it’s riveting reading.  But I wanted to celebrate for a moment instead.

I want to celebrate 2 things;

1.  We recently completed our FREE 2009 ACH Educational Webinar Series and I just wanted to say thank you to all who participated – you know who you are.  And, of course, a big thank you to the fine folks at UMACHA – Kate Cole, Donna Olheiser and Angi Farren and EPN’s (Electronic Payments Network) Laurie Applebaum for their time, energy, knowledge and patience.

We started the ACH Educational Webinar Series in 2007 with a series of 6 targeted ACH educational offerings.  The program has grown and this year we had 7 ACH webinars and 2 Check webinars.  The check training was a nice departure from the norm for us and also a great learning opportunity.

We are already hard at work for 2010 and as soon as we have the dates nailed down, I’ll let you know.  While we will continue with training at the beginner level, it works nicely for folks new to ACH, those who have been around for a while, but wanting some formal training, a refresher for those already in the know and of course, earning continuing education credits is not a bad deal either.

It has been a wonderful year of learning and I hope we all benefitted.  I know I did.

2.  October was a banner month for Everything ACH.  We surpassed 1,100 visits for the month.  I cannot begin to describe how excited I am about this.  If I recall correctly, during the first month – August 2008, we had only 12 visitors.  It was several months later when we finally broke the 100 visitor mark – January 2009.  We had 450 visitors that month.  I was amazed. 

In October, our official number was 1,137 visits.  That makes almost 7,500 visits so far this year – through the end of October.  I hope this means that I am writing about stuff that interests you and that you are learning.  After all, that’s the goal. 

All along I have received some great questions and comments in support of my work.  I would love to hear more – any feedback is welcome…questions or comments.

I have every intention of continuing my work of trying to explain ACH in a plain, simple, easy-to-understand manner and I hope you’ll stick with me.

That being said, thank you.  Thank you for visiting.  Thank for returning.  And thank you for passing the word. 

Hope to see you back soon,

ACH Guy

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Posted by achguy