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DIRECT DEPOSITS

Function 
To withdraw loan payments from borrowers’ bank accounts, transfer those funds to your account, post the payments to the loan histories and prepare Acknowledgment Forms.


Operating Instructions

Agency Setup (Step 1)

Agency Bank Accounts
Should you wish to use more than one bank account for direct deposits, use this field to name the account so you can easily recall the setup information.

To add an additional account, simply type in the name and you will be asked if you wish to add an account. Answering yes will clear the existing account’s information from the screen, allowing you to enter information for the new account.

Organization Name 
This field will be automatically completed based on the information entered under Tools, Organization. However, it can be edited as desired.

Organization Bank Acct 
The bank account number in which funds are to be deposited.

Security Record #1 
An optional field, to be completed if the number is required and/or supplied by the organization’s bank.

Security Record #2 
An optional field, to be completed if the number is required and/or supplied by the organization’s bank.

Account Routing # 
The appropriate routing number supplied by your bank to allow funds to be properly transferred into your account.

Destination Routing # 
Fund transfer may be processed by a local bank or through a federal reserve facility. This number is provided by your bank, and indicates the facility that will process the transfer.

Destination Name 
The name of the facility where transfer will be processed.

Origination Routing # 
Provided by your bank, this number indicates the facility requesting, or “originating” the transfer of funds.

Origination Name 
The name of the facility originating the transfer of funds.

Account Type 
Select from checking or savings, indicating the type of account funds are to be transferred into.

Balanced File 
Your bank will determine if the file is to be balanced (a combination of debits and credits). If a balanced file is requested by your bank, clicking on this box will result in a checkmark in the field. If left unchecked, the total amount to be deposited into your account will appear as a debit in the Company Batch Control and File Control areas of the transmittal file.


Loan Setup (Step 2)

Loan 
Select the appropriate loan from the combo box or manually enter the loan number.

Bank Name 
The official name of the borrower’s bank where the account from which funds are to be withdrawn is held.

Bank Routing # 
The official routing number of the borrower’s bank.

Borrower’s Acct # 
The number of the account from which funds are to be withdrawn.

Status Active: 
When this box is selected, any Direct Deposit processing will include the loan.

Pre-note: 
Most banks require Pre-note processing to verify all numbers are in place, and to verify that the file is acceptable to the bank. This takes place prior to any funds being transferred.

Inactive: 
If the loan has been repaid, or Direct Deposits are suspended for any reason, selecting this box will exclude the loan from Direct Deposit activity.

IMPORTANT NOTE: Pre-noted loans are not automatically changed to “active” – you must make this change manually. When a file is created, it may be for testing purposes, or even need to be replaced prior to submittal to a banking institution. If the change occurred automatically, the file could be sent with incorrect data. Manual editing of the status field will help ensure loans that are marked “prenote” are not changed to “active” except by your choice.

Account Type 
Indicates the type of account the borrower will be using.

Agency Bank Account
If more than one Agency Bank Account has been established for direct deposit, select which one this loan’s repayments should be deposited to. This field will be available only if more than one Agency Bank Account has been entered.

Additional Principal Payment:
Entering an amount here will increase the amount of money withdrawn from the loan client’s bank account. This amount will be applied directly to principal without regard to any other unpaid interest or fees.


Prepare Monthly File (Step 3)

Deposit Effective Date 
The date the transfer will take place, or the date the funds are to be deposited into your account.

Include Payments Due On 
The day of the month appropriate to the payments being processed. In order for the program to recognize the loans for which transfers are to take place, this date must match the data found in Loan Master, Loan Terms, Payment Date.

File Name 
The name of the file being created; this name may be determined by your bank.

Standard Entry Class Code
Select from PPD, CCD, CTX, or CTP depending which type your bank requires.

Agency Bank Accounts
If you have entered more than one Agency bank account on the Agency Setup tab, then you must select which account will be used for the direct deposit file currently being prepared. This field will not be available if you have only one Agency bank account established.


Process Buttons

Prepare 
Creates a file to be forwarded to your bank to process the fund transfers. Opportunity is given to direct the file be saved to the appropriate folder or drive.

Print 
Produces an on-screen report reflecting loan information related to the transfer being processed.

Print Text 
Produces an on-screen text file reflecting loan information in the format used in the file being forwarded to the bank.


Prepare Posting (Step 4)
After you have Prepared and Printed, the Prepare Posting section will become available.

Activity Period 
Select the activity period in which the payments are to be included.

Acknowledgment Date 
Enter the date to appear on the Loan Acknowledgment.


Process Buttons (Step 5)

Post 
Posts the activity included in the fund transfer to the Activity Period as entered, and the loan histories. Once the deposit has been posted, a message “The posting has been processed.” should appear. Select “Print”, which will produce Acknowledgment Forms for the payments processed. Review for accuracy to ensure the process has been completed successfully.

Print 
Produces on-screen Acknowledgment Forms related to the fund transfers being processed.


Things You Should Know
Steps 1 and 2 only need completed when you are first beginning to use the supplement. As new loans are added, Step 2 Loan Setup is used. Monthly processing involves Step 3 Prepare Monthly File, Step 4 Prepare Posting, Step 5 Post and Print.

Step 3 Prepare Monthly File must be completed prior to going to Step 4 Prepare Posting. If you have processed step 3 using a payment due date for which no loans were found, the file will be empty. In this situation, you may receive the message: “You must create a text file prior to posting.” Because the file contains no data, it is not recognized as a valid text file. Review the payment due date entered against the loan(s) that have been setup and ensure you are using a valid date.

Should you be utilizing more than one Agency Bank Account, be certain to complete the entire Prepare Monthly File screen, including Posting the payments to the loans before proceeding to create a direct deposit file with another Agency Bank Account. All deposit information will be deleted and no longer available for posting purposes once you begin preparing another file to send to a different bank account.

If loans making 24 payments per year are setup for Direct Deposit, the two date fields in Loan Master, Loan Terms tab, should be in chronological order. If, for example, loans are due on the 1st and 15th of the month, the Loan Master should have 1 and then 15. This is necessary to allow the program to accurately calculate the “new paid-thru date”. If this date is calculating as an entire month instead of a partial month, review the info within the Loan Terms tab and edit as necessary. Note: Tools, Build History, can be safely used to edit paid-thru dates, so if the incorrect dates were posted through Direct Deposit, use Build History to correct. Then edit Loan Master, and verify the paid-thru date is correct when Direct Deposit is next processed.

Important Note: When a file is created, it sometimes becomes necessary to redo this step and create a second file with the same name. Files with the same name may also be created due to the bank’s request for a specific file name. When this occurs, it is very important the first file be deleted prior to creating the second file with the same name. Although opportunity is given to “overwrite” the data within the first file is not always completely deleted. You may want to copy the first file to a disk, or rename it before creating a subsequent file using the same name.

Contact your bank prior to setting up Direct Deposit to be certain they are prepared to handle the fund transfer. Appropriate routing and account numbers will be supplied by the bank.

The file created to be forwarded to the bank is in accordance with National Automated Clearing House (NACH) procedures, and is the standard followed by most banking institutions.

Borrowers are required to provide the banking institutions involved with signed authorization prior to funds being withdrawn from their accounts. Since your borrowers may deal with many different banks, they should request the appropriate form from their bank.

Banking procedures often require a testing period to be assured the file created will provide the information necessary for fund transfer. The timing will be determined by your bank.

Another standard bank procedure requires that all accounts be processed as “pre-note” prior to any fund transfer taking place. This usually means that the loan will be included in the file one month prior to the actual transfer. Pre-note is an available selection on Loan Setup. Once the pre-note period is processed, and the bank has given indication that the information is valid, change the loan from “pre-note” to “active”.

Direct Deposit files may be saved to a disk, cd, or electronically forwarded to the bank. Your bank will give you instruction for the proper file transfer.

Banks usually have deadlines for processing fund transfers. For example, a transfer that is to take place on the 1st of the month may need to be forwarded to the bank three working days prior. Again, discuss this issue with your bank.

Prior to posting, review the loans selected for accuracy. If a loan has been repaid in full, you will need to mark them “inactive” to avoid future transfers. It is much easier to verify loans to be included in the transfer are accurate prior to preparing the file than it is to void a transfer that took place inappropriately.

Sometimes there will be a need to void a transfer. This is most often due to insufficient funds in the borrower’s account or the account being closed. When this occurs, follow standard NSF procedures, found in Help under Loan Activity, Handling Special Situations, Non-sufficient Funds Checks.