ACH Origination

What is ACH Origination?

ACH Origination is a service offered by First National Bank of Milaca that allows any business customer the ability to originate electronic transactions. Organizations that initiate these transactions are called "originators." Transactions can be either debits or credits. Examples of debit transactions include utility payments, account drafts, membership fees, dues, insurance premiums, etc. Credit transactions are usually for Direct Deposit of Payroll.

Who can participate in ACH Origination?

Any company whose financial institution has the capability to originate Automated Clearing House (ACH) transactions can become an originator. First National Bank of Milaca has implemented a comprehensive ACH processing system that allows us to originate and receive ACH transactions on our customers' behalf. We have taken this technology and combined it with PC software and payment expertise to create ACH Origination.

What is ACH?

The Automated Clearing House (ACH) was formed in 1978 to provide a nationwide network for distributing electronic transactions. All financial institutions are required to accept ACH. According to the NACHA website (www.nacha.org), "the ACH network serves 20,000 financial institutions, 3.5 million businesses, and 135 million individuals. In 2002 there were almost 9 billion ACH payments made worth more than $24.4 trillion."

Why should my business be interested in ACH Origination?

Participation in ACH Origination can reduce the costs associated with manually processing debits and credits. The cost to create and distribute payroll checks ranges from $.50 to $2.00 per check. If you consider the hassle of employees trying to get a deposit in on time, second or third shift employees, and absent or sick employees, manual payroll distribution can negatively impact your organization. The cost of Direct Deposit of Payroll using ACH Origination is only a fraction of the cost of manual processing. Similarly, the cost of manually creating invoices, mailing them to customers, providing a return envelope, waiting for checks to be mailed, and creating deposits averages $1.00 to $3.00 nationally. Direct Debit using ACH Origination is the most cost effective way of processing any type of receivable that is currently handled manually.

How can I determine what my savings will be?

First National Bank of Milaca will be glad to assist you in determining the savings relevant to your situation.

How will I get my employees/customers to sign up for ACH Origination?

First National Bank of Milaca can help in communicating the benefits of ACH Origination. Employees/customers are not as cautious as they once were toward ACH transactions. Most individuals have at least one automatic transaction posting to their account and more consumers use the ACH system than ATMs. Employees/customers sign an authorization form allowing you to perform the transaction on their behalf. Employees/customers can cancel the ACH transaction simply by notifying your company.

Do my employees/customers need to have their accounts at First National Bank of Milaca to participate?

No. They can have accounts at any financial institution in the United States.

How will I get the transaction information to First National Bank of Milaca?

There is an ACH file format that is standard throughout the U.S. and your existing software might already have the capability to create this type of file. If you do not have the capability to create an ACH file, we will provide a PC software package to you. This package allows you to enter transaction information such as dates, amounts, financial institution routing numbers, account numbers, and information relating to the term and frequency. Transaction files generated from this software are formatted and transmitted to First National Bank of Milaca via modem.

How will payments be settled to my accounts?

The offset of the transactions you originate will be posted to any Demand or Savings account held at First National Bank of Milaca. For example, if you originate $5000 in Direct Deposit credits, your account will be debited for $5000. If you originate $5000 in debit transactions, your account will be credited for $5000.

What effect will ACH Origination have on my cash flow?

ACH Origination can improve cash flow dramatically. For example, suppose you are sending invoices on a monthly basis. You mail invoices 4 times per month; however, your customers send in payments whenever they get around to it. This means incoming cash is delayed. With ACH Origination, you would create 4 transaction files and send them to First National Bank of Milaca. On the date the transactions are to post (the effective date), your account would be credited with the entire amount of the transactions. No more waiting for your customers to remember to mail you a check!

What about returned items?

ACH transactions can be returned in the same manner as checks. Incoming ACH returns will be communicated to you on a daily basis, as they happen. You can either reinitiate the transaction or handle it as you would a returned check.

What do I need to get started?

Contact First National Bank of Milaca. We will assist you in completing the ACH application, determining your method of transaction generation, and getting an Originator Agreement signed.