Guide to Handling Direct Deposit

Transcription

1 PAYROLL CS DIRECT DEPOSIT Guide to Handling Direct Deposit version 2009.x.x

2 TL20765 (7/10/09) Copyright Information Text copyright by Thomson Reuters/Tax & Accounting. All rights reserved. Video display images copyright by Thomson Reuters/Tax & Accounting. All rights reserved. Thomson Reuters hereby grants licensees of CS Professional Suite software the right to reprint this document solely for their internal use. Trademark Information The trademarks used herein are trademarks and registered trademarks used under license. All other brand and product names mentioned in this guide are trademarks or registered trademarks of their respective holders.

3 Contents Introduction... 1 Terms and definitions... 1 ACH... 1 ACH files... 2 ACH operator... 2 Effective date... 2 EPS files... 2 InterceptEFT... 2 NACHA... 2 Originator... 3 Originating Depository Financial Institution (ODFI)... 3 Prenote files... 3 Processing window... 3 Receiver... 3 Receiving Depository Financial Institution (RDFI)... 3 Overview of Payroll CS Direct Deposit... 5 Options for handling ACH processing... 6 Working with InterceptEFT... 6 Advantages... 6 Disadvantages... 6 Working directly with individual banks... 7 Advantages... 7 Disadvantages... 7 Working with InterceptEFT... 9 Establishing services with InterceptEFT Application and agreements Fees for ACH processing services File submission and transmission testing Transmission schedules and deadlines Standard 4-day processing window Premium 3-day processing window Payroll CS Guide to Handling Direct Deposit iii

4 Contents Vendor and tax payment 5-day processing window Billing and tax impound processing Payroll impound processing InterceptEFT processing days with example scenarios Standard 4-day processing window examples Scenario one Scenario two Premium 3-day processing window examples Scenario one Scenario two day processing window examples (for tax payments and vendor checks only) Scenario one Scenario two Transaction types Setup steps in Payroll CS and the Direct Deposit module Request and install the Direct Deposit Transmission license from Thomson Reuters.. 17 Complete the global setup steps Complete the client and employee setup steps File / Client Properties dialog Setup / Checkbook dialog Setup / Employees window Complete the vendor setup steps Setup / Vendors window Impound transaction setup Alternate accounts for employee direct-deposit setup Setup of calculation profiles when using alternate accounts Processing steps Prenoting test files Recording the payroll information Reviewing the transactions in the EPS file before creating the ACH file Editing the ACH file before you transmit Creating the ACH direct deposit file Transmitting the ACH file to InterceptEFT Receiving file confirmations from InterceptEFT Connecting to InterceptEFT without transmitting files Using the Impound features Setting up bank information Setting up the Impound checkbook Enabling the Impound checkbook Assigning the client impound checkbook Adding direct deposit information to the withdrawal checkbook Specifying required information in the Impound Funding dialog Setting up processor information Setting up vendors for impound Prefunding checks for impound Post funding checks for impound Creating manual fund transactions for impound Child support direct deposit overview Setting up the deduction item iv Payroll CS Guide to Handling Direct Deposit

5 Contents Setting up direct deposit information Setting up the disbursement unit as a vendor Creating a zero balance test file Processing payroll and child support payments Working Directly with Individual Banks Establishing bank services Direct Deposit with Individual Banks Setup Example Working directly with individual banks Restoring the sample data Direct deposit scenario Adding banks for direct deposit Setting up the client checkbook for direct deposit Setting up the client properties for direct deposit Modifying the Header record in the ACH file Setting up the direct deposit deduction items Setting up employee direct deposit information Exercise for setting up employee direct deposit information Creating a Prenote test file for direct deposit Creating the ACH Detail Report Updating the account status Entering payroll data for direct deposit Using alternate accounts for direct deposit Displaying the list of checks Printing the Unprinted Checks report Printing the direct deposit payroll checks Printing the payroll reports Creating the ACH file Reversing transactions Viewing the ACH file Removing a transaction Working with vendor direct deposit Making electronic depository tax payments Child support direct deposit overview Setting up the deduction item Setting up direct deposit information Setting up the disbursement unit as a vendor Creating a zero balance test file Processing payroll and child support payments Removing the setup example direct deposit banks Payroll CS Guide to Handling Direct Deposit v

6 Contents Appendix: InterceptEFT Contract Package InterceptEFT agreement forms General information forms Processor forms Client forms vi Payroll CS Guide to Handling Direct Deposit

7 Introduction This guide covers the unique benefits and features available when using Payroll CS and its optional add-on Direct Deposit module, which are both part of the Creative Solutions Accounting (CSA) software. This guide also provides assistance in setting up and processing direct deposit for your payroll clients and includes the following: A brief overview of the features and functionality of the Payroll CS Direct Deposit module. An overview of options for handling ACH processing for direct deposit working with InterceptEFT, or working with individual banks. Detailed information about direct-deposit setup and processing for Payroll CS and Direct Deposit module users who choose InterceptEFT as their ACH processor. An overview of the setup and processing steps that are typically required by individual banks (for users who prefer to choose this option for ACH processing). A walkthrough example covering setup and processing issues for a client with employees who have elected direct deposit for all or a portion of their payroll checks. Note: This guide assumes that you are a licensed user of both Payroll CS and the Direct Deposit module, and that you ve already reviewed the Payroll CS Getting Started guide and the Payroll CS Tutorial. Terms and definitions ACH The Automated Clearing House (ACH) network is a nationwide system for interbank transfers of electronic funds. It serves a network of regional Federal Reserve Banks processing the distribution and settlement of electronic credits and debits among financial institutions. ACH payments include direct deposit of payroll; Payroll CS Guide to Handling Direct Deposit 1

8 Introduction business-to-business payments; and federal, state, and local tax payments, as well as other types of electronic funds transfers. ACH files An ACH file is a simple ASCII-format file that adheres to Automated Clearing House specifications. A single ACH file holds multiple electronic transactions much like a manila file folder that is used to store and transmit dozens of sheets of paper with information related to a single topic. Each transaction within an ACH file carries either a credit or a debit value. Typically, a payroll ACH file contains many credit transactions to employees checking or savings accounts, as well as a balancing debit transaction to the employer s (that is, your client s) payroll account. ACH operator An ACH operator is a central clearing facility operated by a private organization or a Federal Reserve Bank on behalf of participating financial institutions, to or from which financial institutions transmit or receive ACH transactions. Effective date An effective date is attached to each and every ACH transaction. For payroll transactions, the effective date represents the day when debit amounts would actually be withdrawn from the employer s payroll account and credit amounts would be deposited to an employee s bank account. An effective date cannot fall on a weekend or on a Federal Reserve holiday. If a transaction were to be sent with an effective date falling on a weekend or bank holiday or on a date that has already passed (known as a stale date ) the transaction would automatically be tagged to settle on the next business day. What that means for your firm as payroll processor is that you need to monitor effective dates carefully because those dates affect when you must transmit your ACH files. EPS files EPS (electronic payment system) files are commonly referred to as transaction files or ACH transactions. They store, for example, employees net pay amounts and financial account information. Typically, multiple EPS files make up what is the more well known direct-deposit file, the ACH file. InterceptEFT InterceptEFT (intercepteft.com) is a third-party processing agent that has specialized in moving money electronically via the Automated Clearing House since InterceptEFT currently serves hundreds of payroll processors and thousands of direct-deposit customers. Thomson Reuters has developed a preferred-partner relationship with InterceptEFT specifically to accommodate the needs of Payroll CS user firms that process payroll direct deposit for their clients. NACHA The National Automated Clearing House Association (NACHA) oversees the ACH network and is primarily responsible for establishing and maintaining operating 2 Payroll CS Guide to Handling Direct Deposit

9 Introduction rules for the network. All financial institutions moving electronic funds through the ACH system are bound by the NACHA Operating Rules, which cover everything from participant relationships and responsibilities to implementation, compliance, and liabilities. The NACHA rules are specific and quite detailed but with nearly seven billion transactions and a combined dollar value of $20 trillion having moved through the system during the year 2000 alone it s clear that adhering to a strict set of rules is crucial to the smooth and successful operation of the ACH system. To learn more about NACHA and the ACH rules, point your Internet browser to nacha.org. Originator An ACH Originator is typically a company that directs a transfer of funds to or from a consumer account. Originating Depository Financial Institution (ODFI) The ODFI is the financial institution that deposits ACH files, on behalf of the Originator, into the ACH network. Prenote files Prenote (or prenotification) files are zero-dollar entries sent prior to the first live entry to notify the Receiving Depository Financial Institution (RDFI) of future payments and to test the validity of account information. Processing window Processing window refers to the time period required to initiate and complete the instructions included within an ACH file. The processing window begins when ACH files are submitted to ODFIs and ends when transferred funds are posted to the receivers accounts. Processing window example To illustrate the scheduling time frame, a weekly payroll schedule for a Friday pay date is shown below. A schedule for a standard 4-day processing window would look like the following: Monday Tuesday Wednesday Thursday Friday Processor sends file to InterceptEFT InterceptEFT pulls funds (collects money) InterceptEFT sends payroll credits to banks Banks pay employees Receiver The Receiver is the person or organization that has authorized the Originator to initiate an ACH entry (for example, a direct deposit transaction) to the Receiver s account with an RDFI. Receiving Depository Financial Institution (RDFI) The RDFI is the financial institution that receives ACH entries from the ACH Operator and posts the entries to the Receiver s accounts. Payroll CS Guide to Handling Direct Deposit 3

10 Introduction 4 Payroll CS Guide to Handling Direct Deposit

11 Overview of Payroll CS Direct Deposit The Direct Deposit module is a seamlessly integrated add-on module to the Payroll CS software within CSA. It enables you to process and manage electronic payroll check deposits for your payroll clients. In addition, it offers the convenience of making electronic payments to vendors, tax deposit agencies, 401(k) plan administrators, and so forth. The Direct Deposit module functions by automatically creating electronic transaction files (called EPS files) from paycheck information in Payroll CS. The program then combines these electronic transactions into larger files that are formatted to meet the required Automated Clearing House specifications for electronic transmission to banks and other institutions within the ACH network. The Direct Deposit module enables you to easily create ACH files that hold payroll transactions not only for multiple employees, but for multiple clients as well. The Direct Deposit module creates standard, NACHA-format ACH files that are complete and ready for electronic transmission through the ACH system. Client and employee bank account information and employee-specified direct deposit amounts are entered into the program during the setup process within the CSA software. The check printing process in Payroll CS automatically triggers the creation of the EPS files within the Direct Deposit module. During check printing, the program looks for all employees for whom direct deposit information has been previously set up and approved and then automatically creates the electronic transactions for those employees. The payroll administrator within your accounting firm can then use the commands within the Direct Deposit module to select one or more client transaction files to include within the ACH file. After the ACH file has been created, Direct Deposit module users electing to use the ACH processing services provided by InterceptEFT (who have already requested and received the Direct Deposit Transmission license from Thomson Reuters and who have already established the required written agreements with InterceptEFT) can transmit their ACH files directly to InterceptEFT from their Payroll CS software. Alternatively, users may opt to send their ACH files via some other method to a bank or other processing agent for transmission though the ACH system. Payroll CS Guide to Handling Direct Deposit 5

12 Overview of Payroll CS Direct Deposit Options for handling ACH processing The Payroll CS Direct Deposit module enables you to choose either of two options for handling the transmission of ACH files on behalf of your payroll clients. These two options are addressed separately in this guide, but please note that you may choose either option on a client-by-client basis. Working with InterceptEFT Thomson Reuters has developed a preferred-partner relationship with InterceptEFT specifically to accommodate the needs of Payroll CS user firms that process payroll direct deposit for their clients. InterceptEFT (intercepteft.com) is a third-party processing agent that specializes in moving money electronically via the Automated Clearing House (ACH). InterceptEFT currently serves hundreds of payroll processors and thousands of direct-deposit customers. Working with InterceptEFT offers a seamlessly integrated way to process your Payroll CS direct-deposit files. The Direct Deposit module enables you to automatically transmit ACH files directly to InterceptEFT, literally with the click of a button. InterceptEFT then oversees and ensures the secure transmission of your clients direct-deposit data through the ACH system. Advantages Direct Deposit module users who process direct deposit for multiple clients can enjoy the convenience and efficiency of sending ACH files to a single processor (InterceptEFT) that will move the files through the ACH system. As a result, your firm can spend far less time keeping track of file submission dates, cutoff times, file status and confirmations, and fee structures as well as far less time ensuring that files meet the special requirements of individual banks. In addition to handling automatic transmissions of direct-deposit payroll information to InterceptEFT, the Direct Deposit module can automatically transmit business-to-business (vendor) payments and payments to federal, state, or local taxing authorities via the InterceptEFT direct transmission service. Direct Deposit module users with an established Internet connection never need to purchase or use any additional software for ACH file transmission. All transmissions of electronic files are made directly from your Payroll CS and Direct Deposit module software to InterceptEFT. InterceptEFT provides daily file confirmations, transaction reports, detailed monthly statements of transaction processing, and free technical support regarding any file adjustments or corrections that you may need to make. InterceptEFT offers a special pricing package to Payroll CS Direct Deposit module users. Thomson Reuters stands behind InterceptEFT and its reputation for providing the most professional, reliable, and comprehensive ACH services available in the market. Disadvantages If you ve already set up relationships with individual banks and have been successfully handling direct-deposit processing for your clients, you may not want to alter a process that has already been working well for you. 6 Payroll CS Guide to Handling Direct Deposit

13 Overview of Payroll CS Direct Deposit Note: For step-by-step instructions on working with InterceptEFT to set up and process direct deposit for your Payroll CS clients, see the section in this guide entitled Working with InterceptEFT that begins on page 9. Working directly with individual banks Working with individual banks has long been the most common avenue for processing direct deposit for payroll clients. The client s bank has traditionally been the initiator of direct-deposit transactions through the ACH network primarily because banks (Depository Financial Institutions, or DFIs) owned the original rights to participate in the ACH system. But even though times have changed and companies like InterceptEFT make the offering of direct-deposit services more streamlined, many times clients feel more comfortable working with their own banks. For Payroll CS Direct Deposit module users, choosing this option for your payroll clients involves establishing a separate relationship with each client s bank to accept ACH files, or having one bank to agree to handle the ACH processing for all of your payroll clients and then following the specific requirements of each bank regarding file setup information and structure as well as the mode of transmission. Advantages If your firm has already set up agreements with individual banks, you ve been successfully handling direct-deposit processing for your payroll clients, and those processes are working well for you and for your clients, there is no need to make any change at all. If your firm prefers to establish one-to-one relationships with individual banks, you may find that choosing this option would more closely fit your interests than would choosing to work with InterceptEFT as your single ACH processing agent. Disadvantages Accounting firms that process direct deposit for a large number of clients typically find dealing with several different banks cumbersome and inefficient. Scheduling dates and cutoff times for file submissions on behalf of multiple clients, making certain that ACH file header records meet the requirements of individual banks, keeping track of different fee structures, sometimes having to purchase and use additional software for file transmission, and often having to use various methods to transmit files (as required by the various banks) are some of the difficulties that have been reported by large payroll processors who have used this option. Sometimes bank personnel do not fully understand how to communicate to a payroll processor how their own bank s ACH processes function, or do not clearly understand the full requirements for ACH file structure, transmission deadlines, and so forth. It has even occasionally been reported that the personnel in some banks have trouble knowing who in their own organization handles setting up ACH processing for their clients. Note: For details about using this option for handling direct deposit for your payroll clients, as well as for instructions on setup and processing within Payroll CS and the Direct Deposit module, see the section in this guide entitled Working Directly with Individual Banks, which begins on page 37. Payroll CS Guide to Handling Direct Deposit 7

14 Overview of Payroll CS Direct Deposit 8 Payroll CS Guide to Handling Direct Deposit

15 Working with InterceptEFT In this chapter we walk you through the actions necessary to establish an account with InterceptEFT and then to set up and process your direct-deposit clients through InterceptEFT. Please keep in mind that to accomplish direct transmission of ACH files from Payroll CS to InterceptEFT, you must first request and install the Direct Deposit Transmission license from Thomson Reuters and also establish services with InterceptEFT. You then need to complete the client and employee setup in Payroll CS in the specific manner described in this chapter, so please review the following sections very carefully. Payroll CS Guide to Handling Direct Deposit 9

16 Working with InterceptEFT Establishing services with InterceptEFT There are several important components involved in establishing services with InterceptEFT, and each of these components is discussed in greater detail within this section: Completing and submitting the application form and associated materials. Preparing and submitting the agreement forms. Understanding the file submission and testing requirements. Understanding and complying with the required transmission schedules and deadlines. Understanding the specific requirements and procedures for each type of transaction. After carefully reviewing this section as well as the documents that are listed and linked in the appendix to this guide, please feel free to contact the Sales Department at InterceptEFT( or to let them know that you are user of the Payroll CS Direct Deposit module within the CS Professional Suite and to discuss any questions that you may have about the application process, processing services, and fee schedules. When you re satisfied that all your questions have been addressed and that InterceptEFT will meet your needs, you can print and complete the appropriate forms and submit them to InterceptEFT by mail. The mailing address for InterceptEFT is provided on all of the forms. Application and agreements To establish an account with InterceptEFT, an application form, a processor agreement, and an authorized signature form are required. Note that links to all required InterceptEFT documents are available in the Appendix: InterceptEFT Contract Package section of this guide, which begins on page 81. ACH Application. This form includes general information about your accounting firm and lists all of the additional documents that need to be submitted to InterceptEFT. InterceptEFT will use this information when reviewing your firm for account approval. Note: Failure to provide all requested supporting documentation will result in denial of the application. Processor Agreement. This is a two-party processing authorization agreement between InterceptEFT and your accounting firm as the payroll processor. The processor agreement identifies the terms (including liabilities and fees) under which you agree to send payroll transactions to InterceptEFT on behalf of your direct-deposit clients. Authorized Individuals Signature Form. This form should list the names, titles, and signatures of all employees of your accounting firm who are authorized to send information to InterceptEFT and to change account or ACH 10 Payroll CS Guide to Handling Direct Deposit

17 Working with InterceptEFT file information. This information must be kept current, and all changes should be sent to InterceptEFT as soon as they occur. To begin processing on behalf of your direct-deposit clients, the following are required: Client Information Form. This form (to be used as a cover sheet when sending the Company Authorization Agreement described below) provides InterceptEFT with the client company s address, contact, types of transactions that will be submitted, and processing window requirements. EIN verification. InterceptEFT is required to have EIN numbers on file for all companies processing through them. You will need to provide InterceptEFT with EIN numbers for your firm and for all your processing clients. InterceptEFT Company Authorization Agreement. This is a three-party processing authorization agreement between InterceptEFT, your accounting firm, and your client. By signing this agreement, the client authorizes your accounting firm (the payroll processor) to transmit direct-deposit transactions to InterceptEFT on the client s behalf. This agreement also warrants to InterceptEFT that the client company will honor all debits and credits forwarded by your accounting firm (as payroll processor) for purposes of providing payroll direct deposit for the client s employees. You must submit a signed Company Authorization Agreement to InterceptEFT for each client prior to submitting transactions on their behalf. InterceptEFT Automatic Debit and Credit Agreement. Each employee of the client company must sign a copy of this form to authorize direct deposit of his or her payroll check. This form authorizes the direct credit/debit of payroll funds to the employee s bank account(s). Bank names, account numbers, social security numbers, and a signature must be completed on this form. Your accounting firm will need to keep these authorization forms on file. (Please do not send these employee forms to InterceptEFT.) The approval process typically takes less than two weeks after you have completed and submitted the EFT Application and supporting agreements. Upon approval, InterceptEFT will provide your firm with all reference information needed to use their service. Fees for ACH processing services InterceptEFT charges a monthly per-client maintenance fee, plus per-transaction processing fees. (For specific fee amounts, please refer to Schedule B of the Processor Agreement form.) File submission and transmission testing Thomson Reuters has worked with InterceptEFT to design a system that automatically connects your Payroll CS Direct Deposit module software to the InterceptEFT servers for immediate file submission. No transmission testing is necessary because that has already been done for you. Sending your ACH files from Payroll CS to InterceptEFT for processing is easy. After you have finished creating the ACH file, simply click the Transmit button* on * The Transmit button appears on the dialog only after you have requested, downloaded, and applied the Direct Deposit Transmission license, as described on page 18 of this guide. Payroll CS Guide to Handling Direct Deposit 11

18 Working with InterceptEFT the Maintain ACH Files dialog. You need only supply an active Internet connection and enter the personal login ID, password, and PIN provided to you by InterceptEFT. The file ID modifier is automatically incremented each time you click the Transmit button to send an ACH file to InterceptEFT. Note: The ID modifier is used in the filename to help InterceptEFT track the number of files it receives for processing. Because InterceptEFT can accept up to 36 files from the same PIN per day, the file ID modifier automatically increments first from 0 to 9 and then from A to Z. Please do not make manual edits in this field. Transmission schedules and deadlines NACHA rules state that if an ACH Operator makes a credit entry available to a bank by 5:00 p.m. (bank s local time) on the banking day prior to the Effective Date, the bank must make that credit available to the Receiver (the employee, for example) at the opening of business on the Effective Date. Opening of business is defined as the later of 9:00 a.m. (bank s local time) or the time the bank s teller facilities and ATMs are open for customer account withdrawals. The daily deadline for transmitting ACH files to InterceptEFT from the Payroll CS Direct Deposit module is 7:00 p.m. Central Time. This allows time for InterceptEFT to check transmission files for proper effective dates and to make adjustments if necessary. There is no restriction on the number of times throughout the day that you may transmit ACH files from Payroll CS to InterceptEFT. InterceptEFT also adheres to the processing schedule of the Federal Reserve Banks. Each year, the Federal Reserve Banks issue a calendar of bank holidays throughout the year that are non-ach processing days (that is, invalid effective dates). These closed dates should be incorporated into your processing window just as if they were Saturdays or Sundays. A calendar of the Federal Reserve Bank holidays can be obtained from the InterceptEFT website (intercepteft.com). Standard 4-day processing window To meet a Friday pay day using the standard four-day schedule would require that files be submitted to InterceptEFT by the cutoff time on Tuesday, however earlier 12 Payroll CS Guide to Handling Direct Deposit

19 Working with InterceptEFT ACH transmissions would be required during holiday periods. A schedule example for a Friday payday is shown in the following table: Monday Tuesday Wednesday Thursday Friday Processor sends file to InterceptEFT InterceptEFT pulls funds (collects money) InterceptEFT sends payroll credits to banks Banks pay employees Premium 3-day processing window If you or your payroll clients require a faster turnaround, InterceptEFT also offers a premium service to enable a three-day schedule. A schedule example for a Friday payday is shown in the following table: Monday Tuesday Wednesday Thursday Friday Processor sends file to InterceptEFT. InterceptEFT pulls funds (collects money); sends payroll credits to banks. Banks pay employees. Note that if a bank holiday were to fall on the Friday, the ACH files would need to be transmitted to InterceptEFT one day earlier (Tuesday) for a Thursday rather than a Friday pay day. Otherwise, InterceptEFT would be required to change the effective date to the next business day and employees would not get paid until Monday. To specify the processing window required for your client, mark the appropriate option in the Direct Deposit tab of the File / Client Properties window. The complete setup and processing steps are covered in the section of this document entitled Setup steps in Payroll CS and the Direct Deposit module that begins on page 17. Vendor and tax payment 5-day processing window For vendor and tax payment transactions, InterceptEFT requires a 5-day processing window. To ensure processing can be completed without any unexpected delays, send vendor and tax payment transactions in an ACH file separate from payroll transactions. The effective entry date must be 5 days from the submission date to InterceptEFT. For example, if you submit a file on Monday, the effective entry date would be Friday, as shown in the following table. Monday Tuesday Wednesday Thursday Friday Processor sends file to InterceptEFT InterceptEFT pulls funds (collects money). InterceptEFT sends collected funds to banks. Collected funds post to Vendor / Tax Agency accounts. Billing and tax impound processing For billing or tax impound transactions, the effective entry date is handled differently. The effective entry date can be as soon as the next available banking business day. However, there is a 3-day hold on the funds after the effective entry date. Make sure you set the effective entry date as early as necessary to accommodate the 3-day hold on the funds. To ensure processing can be completed without any unexpected delays, send billing and tax impound transactions in an ACH file separate from payroll, vendor payment, or tax payment transactions. Payroll CS Guide to Handling Direct Deposit 13

20 Working with InterceptEFT Payroll impound processing Similar to billing and tax impound transactions, for payroll impound transactions the effective date can be as soon as the next available banking business day. However, there is a 2 day hold on the funds after the effective entry date. Be sure to set the effective entry date as early as necessary to accommodate the 2 day hold on the funds. InterceptEFT processing days with example scenarios These scenarios are provided to help you more clearly understand the InterceptEFT processing windows. InterceptEFT begins counting transmission days based on the date you send the file. The transmission days are numbered below the illustrations. First, here is a glossary list of terms in the InterceptEFT calendar. Processor sends file to InterceptEFT. This is when the client takes the payroll file created in CSA and sends it to InterceptEFT. InterceptEFT pulls funds (collects money). This is when InterceptEFT takes the money from your client s bank. InterceptEFT sends payroll credits / collected funds to banks. This is when InterceptEFT forwards the funds to the Federal Reserve for disbursement to banks. Banks pay employees. This is when employees are paid. Standard 4-day processing window examples Scenario one In this scenario, you send a direct deposit file to InterceptEFT on Tuesday for employees to be paid on Friday. On Wednesday, InterceptEFT pulls funds from the client s bank, on Thursday the credits are sent to the Federal Reserve for disbursement to banks, and on Friday, the banks pay the employees. Monday Tuesday Wednesday Thursday Friday Processor sends file to InterceptEFT InterceptEFT pulls funds (collects money) InterceptEFT sends payroll credits to banks Banks pay employees Scenario two In this scenario, you send a direct deposit file to InterceptEFT on Wednesday to be paid on the effective date (based on the check date) of Tuesday of the following week. Thursday is a hold day, on Friday, InterceptEFT pulls the funds from the clients bank. On Monday of the following week, credits are sent to the Federal Reserve for disbursement to banks, and on Tuesday the banks pay the employees. Monday Tuesday Wednesday Thursday Friday Processor sends file to InterceptEFT Hold day InterceptEFT pulls funds (collects money) 14 Payroll CS Guide to Handling Direct Deposit

21 Working with InterceptEFT 1 1 (hold) 2 Monday Tuesday Wednesday Thursday Friday InterceptEFT sends payroll credits to banks Banks pay employees 3 4 Premium 3-day processing window examples Scenario one In this scenario, you send a direct deposit file to InterceptEFT on Wednesday for employees to be paid on Friday. Monday Tuesday Wednesday Thursday Friday Processor sends file to InterceptEFT InterceptEFT pulls funds (collects money) and sends payroll credits to banks. Banks pay employees Scenario two In this scenario, you send a direct deposit to InterceptEFT on Monday for employees to be paid on the effective date (based on the check date), which is Friday. In this case, Tuesday and Wednesday would be considered hold days. Then on Thursday, credits are sent to the Federal Reserve for disbursement to banks, and on Friday the employees are paid. Monday Tuesday Wednesday Thursday Friday Processor sends file to InterceptEFT InterceptEFT pulls funds (collects money) and sends payroll credits to banks. Banks pay employees 1 1 (hold) 1 (hold) day processing window examples (for tax payments and vendor checks only) A 5-day processing window is used only for tax payments and vendor checks. Scenario one In this scenario, you send a tax payment to InterceptEFT on Monday to be paid to the agency on Friday. On Tuesday, InterceptEFT pulls the funds from the client s bank, Wednesday is a hold day, on Thursday InterceptEFT sends credits to the Federal Reserve for disbursement to the bank, and on Friday the bank pays the tax agency (posts the payment to the account). Payroll CS Guide to Handling Direct Deposit 15

22 Working with InterceptEFT Monday Tuesday Wednesday Thursday Friday Processor sends file to InterceptEFT InterceptEFT pulls funds (collects money). Hold day InterceptEFT sends collected funds to banks. Collected funds post to Vendor / Tax Agency accounts Scenario two In this scenario, you send a tax payment to InterceptEFT on Tuesday to be paid on an effective date (based on a check date) of Friday of the following week. Wednesday of this week through Monday of the following week are considered idle days. On Tuesday, InterceptEFT pulls the money from the client s bank, Wednesday is a hold day, on Thursday InterceptEFT sends money to the Federal Reserve for disbursement to the bank. On Friday, the bank pays the tax agency (posts the payment to the account). Monday Tuesday Wednesday Thursday Friday Processor sends file to InterceptEFT 1 (Idle) (Idle) (Idle) Monday Tuesday Wednesday Thursday Friday InterceptEFT pulls funds (collects money). Hold day InterceptEFT sends collected funds to banks. Collected funds post to Vendor / Tax Agency accounts. (Idle) Transaction types InterceptEFT accepts the following types of transactions for ACH processing: Payroll Child support withholding payments Direct vendor payments Tax payments Impounding for taxes Impounding for billing or other Impounding for payroll 16 Payroll CS Guide to Handling Direct Deposit

23 Working with InterceptEFT Setup steps in Payroll CS and the Direct Deposit module Request and install the Direct Deposit Transmission license from Thomson Reuters Contact Thomson Reuters, Professional Software & Services, to ask for the free-byrequest Direct Deposit Transmission license that is required to activate the InterceptEFT functionality in your Payroll CS and Direct Deposit module software. To purchase the Direct Deposit module as well as to request the Direct Deposit Transmission license that enables you to transmit ACH files directly to InterceptEFT, contact your CS Sales Representative at or via our website at CS.ThomsonReuters.com. If you are already a licensed user of the Direct Deposit module but want to request just the Direct Deposit Transmission license to add the ability to transmit ACH files directly to InterceptEFT, contact a CS Sales Representative at or via our website at CS.ThomsonReuters.com. Thomson Reuters will provide you with an updated software license for your CS Professional Suite Accounting Products software. When that file becomes available, complete the following steps to download it via CS Connect. 1. Open your CSA software and choose File / CS Connect. 2. In the CS Connect dialog, mark the Retrieve licenses checkbox and then click the Call Now button to begin the download process. Note: The Direct Deposit Transmission license is not required if you are already a licensed user of both Payroll CS and the Direct Deposit module and you choose to work with individual banks rather than with InterceptEFT. Important! To ensure that your ACH files will be transmitted to InterceptEFT correctly, you need to complete the steps outlined below exactly as described. Complete the global setup steps You first need to set up InterceptEFT as one of your direct-deposit banks that will be sending or receiving electronic payments on behalf of you and your clients. The steps in this section will make InterceptEFT available for selection as the Immediate Destination Bank for any of your payroll clients. 1. From the CSA main window, choose Utilities / Direct Deposit. 2. From the Maintain Electronic Transaction Files dialog, choose Setup / Bank Information. Payroll CS Guide to Handling Direct Deposit 17

24 Working with InterceptEFT 3. In the Bank Information dialog, click the Add button and enter the following information for InterceptEFT: Description Bank name InterceptEFT InterceptEFT RTN (routing/transit number) Click the Enter button to save the record. 5. Continue adding a bank information record for each bank used by any of your clients or their employees. Remember to verify the bank s routing number prior to clicking the Enter button. Notes Because each bank has a unique routing number (RTN), any bank needs to be set up only once in Payroll CS to make that global bank information available for all clients and employees. By default, the ACH banks list is sorted by Description, but you can click on any column heading to modify the sort order. 6. Click the Done button to return to the Maintain Electronic Transaction Files dialog. 7. Click the Done button to return to the CSA main window. Complete the client and employee setup steps File / Client Properties dialog 1. Open the client in CSA and then choose File / Client Properties. 2. In the Client Properties dialog, click the Direct Deposit tab and enter from the following table. (Also see the following illustration.) 18 Payroll CS Guide to Handling Direct Deposit

25 Working with InterceptEFT Field Immediate destination bank ID Immediate origin Immediate origin name Originating DFI bank ID Processing window Enter the following information: InterceptEFT <Enter your own accounting firm s 9-digit tax ID number.> <Enter your own accounting firm s name, using up to 23 characters.> <From the drop-down list, select the bank from which the funds will be debited.> <Specify the processing window appropriate for the selected client.> Important! All other fields in the Direct Deposit tab of the Client Properties dialog must be left blank. 3. Click OK to return to the CSA main window. Setup / Checkbook dialog 1. From the CSA main window, choose Setup / Checkbook. 2. In the Checkbook Setup dialog, select the appropriate checkbook and then click the Edit button. 3. In the Direct Deposit tab, specify the withdrawal bank (client), account type, and status by selecting the appropriate information from the drop-down lists. 4. Click the Enter button to save the information, and then click the Done button to close the Checkbook Setup dialog. Payroll CS Guide to Handling Direct Deposit 19

26 Working with InterceptEFT Setup / Employees window Repeat the following for each employee who requests payroll direct deposit. 1. From the CSA main window, choose Setup / Employees. 2. In the Employees window, highlight the employee who will receive the direct deposit and click the Edit button. 3. In the Tax Withholdings and Deductions tab, verify that the employee record includes a deduction item for direct deposit. 4. If you are using journal entries, enter a GL number for the deduction item in the G/L Acct column. This is generally the same net pay GL number used for the checkbook from which the deduction is being taken. 5. Click the button for the direct deposit deduction item and enter or verify the information in the Item Properties dialog. Note: If you have created a new direct deposit deduction item (rather than using the default CSA Direct Deposit deduction item), the item must be specified for the CSA direct deposit calculation in order to prompt creation of the EPS file. Choose Setup / System Configuration / Deduction Items. Edit the item you are using for direct deposit, click the Calculations tab, and then mark the CSA direct deposit checkbox. 6. In the Direct Deposit tab, enter or select the appropriate information as specified by the employee: Select the employee s bank ID from the drop-down list. Enter the employee s bank account number. Select the employee s account type from the drop-down list. Enter either the amount or the percentage for the direct-deposit deduction. Select the status from the drop-down list. (You may choose Approved, Suspend, Waiting, or Prenote / Zero Balance. Note that a Suspend status is used if the employee wants to temporarily stop the direct-deposit deduction. For Prenote information, please refer to the processing section below.) 7. If the employee is having funds direct deposited in more than one account, use the additional lines to enter the required information for those accounts. Note: There is no limit for the number of accounts you can set up into which funds can be deposited. 8. Click the Enter button to save the information for the selected employee. Complete the vendor setup steps Setup / Vendors window If appropriate for your client, use the following procedure to set up a payroll agent vendor for direct deposit or, if applicable, for discretionary tax payments. (Please refer to the CSA help topics for more details about vendor setup, including 20 Payroll CS Guide to Handling Direct Deposit

27 Working with InterceptEFT information about the automatic creation of vendor checks for payroll agents using GL account triggers.) 1. From the CSA main window, choose Setup / Vendors. 2. In the Vendors window, select the vendor, click the Edit button, and then click the Direct Deposit tab. 3. In the Direct Deposit tab, enter or select the appropriate information as specified by the vendor: To have payroll agent checks posted to a direct deposit account, mark the Process electronic payment checkbox. Select the vendor s deposit bank from the drop-down list. Enter the vendor s deposit account number. Select the vendor s account type from the drop-down list. Select the status from the drop-down list. (You may choose Approved, Waiting, or Prenote / Zero Balance. For Prenote information, please see the Processing steps section that begins on page 23.) Impound transaction setup Use the following procedure if you plan to impound money for tax, billing, or other purposes for your client: 1. In the CSA main window, choose Utilities / Direct Deposit. 2. In the Maintain Electronic Transaction Files dialog, choose Setup / Processor Information. 3. In the Processor Information dialog, enter your company name and tax ID number. 4. Click OK to save your information and close the Processor Information dialog and then click Done to close the Maintain Electronic Transaction Files dialog. 5. Choose Setup / Vendors to open the Vendors window and then set up your firm as a vendor for your client. Please refer to the CSA help topics for more details about vendor setup. 6. In the Direct Deposit tab of the Vendors window, be sure to mark the Commercial account checkbox, which will activate the Impound type dropdown list. Select the appropriate impound option from this list. 7. When you have finished entering information, click the Enter button to save the vendor record and close the Vendors window. Payroll CS Guide to Handling Direct Deposit 21

28 Working with InterceptEFT Note: To impound money for tax purposes as well as for billing or other purposes, you must set up your firm as two separate vendors, one for each impound type. Alternate accounts for employee direct-deposit setup A checkbox option called Activate alternate accounts on the Direct Deposit tab of the Employees window enables you to use a different direct-deposit setup configuration for the employee, and the Type field allows you to choose either the primary or alternate configuration when specifying the information for direct deposit. For example, if an employee has a fixed direct deposit of $ to pay a bill from his normal payroll check, he may not want to make an extra payment if he receives a bonus check; the alternate account type enables the employee to direct deposit the bonus check into his regular checking account. Use the following procedure to set up and use an alternate account for a check run: 1. In the CSA main window, choose Setup / Employees. 2. Select the appropriate employee and then click the Edit button. 3. Click the Direct Deposit tab. 4. Mark the Activate alternate accounts checkbox. 5. Select Alternate from the drop-down list in the Type field. 6. In the Direct Deposit Information grid, enter the employee s information for the special check run. Note: If this information is not set up or does not have approved status when paychecks are processed, a live check will be produced. 7. Click the Enter button to save the employee, and then close the Employees window. Setup of calculation profiles when using alternate accounts 1. Choose Setup / Calculation Profiles. 2. Click the Add button to create a new calculation profile and enter the appropriate information on the General tab. 3. Click the Deduction and Withholding Overrides tab. 4. Mark the Use alternate direct deposit account checkbox. Note: This checkbox will be available only if the Activate alternate accounts checkbox in the Employees window has been marked for at least one employee. The program automatically uses the primary direct deposit information for employees who do not have the Activate alternate accounts checkbox marked. 5. Click the Enter button to save your choices, and then click Done to exit the Calculation Profiles dialog. 22 Payroll CS Guide to Handling Direct Deposit

29 Working with InterceptEFT Processing steps Prenoting test files When setting up any new employee direct-deposit information and before sending actual payroll data, the status for all accounts on the Direct Deposit tab of the Setup / Employees window should start as Prenote / Zero Balance. Prenote files are used to verify the receiver s account number, name, and bank routing number prior to any transmissions of live payroll files for ACH processing. Note: While sending prenote files is not mandatory, InterceptEFT does strongly recommend using prenote files for file testing prior to transmitting live data. Please allow 5 to 6 business days after transmitting a prenote file before sending ACH files with live payroll data. This gives the RDFI time to respond if account information has been recorded incorrectly. After you have transmitted a prenote file, the status of all accounts associated with the file automatically changes from Prenote to Waiting. However, if corrections are needed, you can make those changes and transmit another prenote file. (To create another prenote file, you must change the status of all accounts from Waiting back to Prenote. This will prevent actual payroll information from being rejected.) 1. Choose Utilities / Direct Deposit. 2. From the menu bar in the Maintain Electronic Transaction Files dialog, choose Tasks / Prenote Accounts. A message appears telling you the prenote file was created successfully. Click OK to dismiss the message prompt. 3. Choose File / Refresh. Note that the prenote file you just created now appears in the left pane of the dialog. 4. Double-click the file to move it to the right-hand (Selected) pane, and then click the Create ACH File button. 5. In the Create ACH File dialog, enter Prenote as the file name. Note that the effective entry date defaults to the system date. 6. Transmit the prenote file to InterceptEFT (by following the steps that begin on page 25). 7. After the prenote account information for the client and for the employees has been verified and prior to sending actual payroll data to InterceptEFT, you need to change the status of all accounts from Waiting to Approved. From the Maintain Electronic Transaction Files dialog, choose Tasks / Update Account Status, mark the Approved Status option, and click OK. Recording the payroll information 1. Choose Tasks / Payroll Check Entry. Please note that if you re using alternate accounts, you need to select the appropriate calculation profile. Press F3 and choose Options from the context menu. In the Data Entry Options dialog, choose the calculation profile appropriate for this check run by selecting it from the drop-down list, and then click OK to return to the Payroll Check Entry window. 2. Enter the payroll data for this check run and then print the payroll checks. The check printing process in Payroll CS automatically triggers the creation of the Payroll CS Guide to Handling Direct Deposit 23