What is the EFFECTIVE ENTRY DATE ?
The 2002 ACH Rules Book (OR 77) published by NACHA defines the Effective Entry Date as follows:The effective entry date is the date specified by the Originator on which it intends a batch of entries to be settled. For credit entries, the effective entry date shall be either one or two banking days following the banking day of processing as establish by the Originating ACH Operator (the processing date). For debit entries, the effective entry date shall be one banking day following the processing date. The definition clearly states credit entries can be submitted to the ACH Operator either one or two banking days prior to the Effective Entry Date. In my opinion, it is an operational decision your internal auditor has implemented to require two banking days for all credit entries to ensure they are transmitted, received and processed on a timely basis.
Second, NACHA rules requires the financial institution (ODFI – Originating Depository Financial Institution) to accept responsibility for all ACH transactions originated whether it is a balanced or unbalanced file. If an originator fails to provide funds to cover their obligation for items submitted into the ACH system, settlement with the ODFI and RDFI (Receiving Depository Financial Institution) will still occur. ODFI’s cannot recall or reverse ACH transactions as a result of an originator failing to provide funds to cover credit entries, as with payroll transactions. If managed properly, sending an unbalanced credit entry only file in the earliest possibly time frame ensures that the RDFI will receive and post the credit entries in a timely fashion; however, it does potentially expose the financial institution to an extra day of credit risk. Transmitting unbalanced files also tends to create more maintenance and manual effort for the financial institution because they will need to keep their Federal Reserve or correspondent bank statements in balance to their internal accounting systems.