What is a REVERSING ENTRY ?
REVERSING ENTRY – A file created by a Sending Point to cancel a previous file or entry because the previous file or entry was sent in error or is a duplicate.
ACH payments are used for everything from direct deposit of your paycheck to electronic monthly bill payment. The majority of payments are problem-free, but occasionally there’s an issue and a transfer needs to be reversed. To avoid surprises, you’ll want to know when and how that is possible (and when it isn’t).
Keep in mind that if a reversal is not possible, there might be other ways to solve a problem.
National Automated Clearing House Association (NACHA) rules cover if and when a simple reversal is allowed, and there are only three situations that qualify.
- Wrong dollar amount: if the wrong amount was transferred (for example, $200 instead of $150)
- Wrong account number: if a transfer had the wrong account number and the sender or recipient was not the right account. This is why “bank errors in your favor” are so elusive.
- Duplicate transaction: if a transfer goes through more than once, the duplicates would obviously be reversed.
In the situations above, the reversal must take place within 5 days, and the affected bank account owner must be notified that her account was debited.
Those three situations are fairly limited, so what if you need to make other types of changes to an ACH payment?
Online Bill Payment
If you pay bills by ACH, there may be times when you want to adjust, change, or delay a payment that would otherwise go through. In those cases, contact whoever is initiating the payment.