Then, when the effective date of the Origination arrives, a debit will post to this clearing account and clear the previous credit. When the Originator is debited early under the prefunded setting, a credit is posted to this clearing account. Thus, per your ACH or treasury management policies, performing annual reviews may be easier or streamlined because there is one risk category without much exposure.įor the back offices and reconciliation departments, many systems or online platforms will require the use of a clearing checking account for handling the prefunded settings. When using the prefunded settings, because you’ve significantly reduced the credit risk possibilities of your Originator, that greatly reduces the risk overall. Why would you use Prefunded? That’s simple – it’s your choice, as an ODFI, to avoid any insufficient funds risk of the settlement debits of your ACH credit originations. O Float Settings = No available balance checks whatsoever, and settlement debit appears on ODFI’s files with a matching Effective Date of the originated ACH credits. The account holder’s account is debited when the credit payments settle. Float Originators – no requirement to pay in advance for transactions, batches or ACH files processed by ODFI.O Prefunded Settings = Available balance reviewed first, then settlement Debit with current banking day is batched within ODFI’s ACH files for immediate posting.
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