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ACH Reversal

Overview

Use the ACH Reversal feature to reverse a direct deposit or electronic tax payment sent in error. Reversals create offsetting ACH transactions that recall the original deposit. This is a time-sensitive process. You must initiate reversals within the NACHA-allowed window to ensure funds are returned.

> Warning: ACH reversals are time-sensitive. Under NACHA rules, unauthorized debits must be reversed within 5 business days of the settlement date. Initiate reversals as soon as you identify the error.

Reversing a Direct Deposit (Employee Payroll)

  1. Go to Client Functions > Electronic Processing > Employee Direct Deposit Bulk (or Employee Direct Deposit Single Co for single-company processing).
  2. The direct deposit history browse opens showing all processed transactions.
  3. Filter by Company ID and Date to locate the deposit to reverse.
  4. Select the transaction(s) to reverse.
  5. Click the Reverse button.
  6. Review the confirmation prompt. It shows the transactions that will be reversed.
  7. Click Yes to confirm. ProPay creates offsetting entries with a settlement date 3 business days from today.

Reversing an Electronic Tax Payment

  1. Go to Client Functions > Electronic Processing > Tax Impounds.
  2. The ACH tax history browse opens showing all processed tax payments.
  3. Filter by Company ID and Date to locate the payment to reverse.
  4. Select the transaction(s) to reverse.
  5. Click the Reverse button.
  6. Review the confirmation prompt.
  7. Click Yes to confirm. Reversed tax payments are routed back through the employer's bank account.

How ACH Reversals Work

When you reverse a transaction, ProPay:

  1. Copies the selected records to a temporary work file.
  2. Swaps the debit/credit flags (a credit becomes a debit, and vice versa).
  3. Sets the settlement date to 3 business days from the current date.
  4. Appends the reversed entries to the deposits or tax file for transmission.

> Important: Reversed transactions must still be transmitted to your ACH processor. After creating a reversal, follow the normal Transmit Direct Deposits process to send the reversal file.

Fields and Filters

Field Description
Company ID Filter transactions by client company
Date Filter by original transaction date
Batch Span Filter by batch number range
Process Flag (Y/N) Indicates whether a transaction has been processed; right-click to toggle

Tips and Warnings

> Warning: ACH reversals do not guarantee funds will be returned. If the employee's bank account has been closed or has insufficient funds, the reversal may fail. Contact your ACH processor if a reversal is not honored.

> Tip: Before reversing, verify you are selecting the correct transactions. Review the debit/credit amounts and employee names carefully.

> Tip: After processing a reversal, you may also need to void the corresponding paycheck. See Void Checks for instructions.

> Note: Tax payment reversals handle different transaction types automatically. Draft transactions convert to bill type, and processed credits convert to bill type during the reversal.

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