WestStar is introducing Prenote Validation to help ACH Cash Manager clients confirm recipient account information before sending a live ACH payment.
What Is Prenote Validation?
A prenote is a zero-dollar ($0) ACH transaction used to help verify that a recipient's routing number and account number are formatted correctly and can be accepted by the receiving bank before a live payment is sent.
Beginning XX/XX/XXXX, WestStar will enable Prenote Validation for ACH Cash Manager clients that originate ACH payments.
When a prenote is sent, a hold will automatically be placed on live ACH payments to that recipient for three banking days after the prenote Effective Date, excluding weekends and federal holidays.
What You Need to Know
- A prenote is a $0 ACH transaction. No funds are moved.
- The recipient will be placed on hold for three banking days after the prenote Effective Date.
- Weekends and federal holidays do not count as banking days.
- The hold is released automatically after the waiting period.
- If the prenote is returned with an error, the recipient's banking information should be corrected before a live ACH payment is sent.
- A prenote helps validate account information, but it does not verify ownership of the account.
Example
If a prenote has a Tuesday Effective Date and no error is received during the waiting period, the first live ACH payment may be authorized the following Monday.
Review Your Existing Payment Templates
Before Prenote Validation is enabled, review your existing payment templates and prior payment batches to confirm that zero-dollar ($0) transactions are not included for recipients who have already received live payments, unless you intentionally want to send a prenote.
If you do not want to send a prenote for a recipient in a batch, use the appropriate option in Cash Manager to exclude the zero-dollar transaction. Depending on the options available, this may include:
- Set All Transactions to Do Not Pay
- Set $0 Transactions to Do Not Pay, if available
When Should I Use a Prenote?
Prenotes may be useful for:
- New recipients receiving ACH payments for the first time.
- Existing recipients whose routing or account information needs to be revalidated.
Frequently Asked Questions
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What is a prenote?
A prenote is a zero-dollar ($0) ACH transaction used to help verify that a recipient's routing number and account number are formatted correctly and can be accepted by the receiving bank before a live payment is sent.
Why should I use a prenote?
Prenotes help reduce ACH payment errors by validating account information before funds are transmitted.
What happens after I send a prenote?
Once a zero-dollar ($0) prenote is authorized, the recipient will automatically be placed on hold for three banking days after the prenote Effective Date, excluding weekends and federal holidays. The hold will be released automatically after the waiting period.
When can I send the first live ACH payment?
You must wait at least three banking days after the prenote Effective Date, excluding weekends and federal holidays, before sending the first live ACH payment to that recipient.
Can I send a prenote for an existing recipient?
Yes. A prenote may be sent at any time to revalidate an existing recipient's routing and account information. A new three-banking-day hold will be applied to that recipient.
Does a prenote verify ownership of the account?
No. A prenote helps confirm that the account information is valid and can be accepted by the receiving bank, but it does not verify that the account belongs to the intended payee.
What if the prenote is returned with an error?
If the prenote is returned with an error, such as an invalid routing number or closed account, the recipient's banking information must be corrected before any live ACH payments are sent.
What if no error is returned?
If no error is returned by the receiving bank during the three-banking-day waiting period, the account information is generally considered valid and live ACH payments may proceed.
What should I do if I receive an ACH Return or ACH Correction?
Update the recipient's banking information before sending another live ACH payment.
Quick Summary
Prenotes provide a way to validate ACH account information before a live payment is sent. By sending a zero-dollar test transaction and waiting three banking days after the prenote Effective Date, excluding weekends and federal holidays, you can help reduce payment errors, avoid unnecessary returns, and improve the likelihood that ACH payments process successfully.
Need Assistance?
If you have questions about Prenote Validation or your ACH payment templates, call us at 915.747.1655, or 1.800.366.4578 [toll-free], to speak with a Treasury Management team member.