Bill.com ePayments are ACH payments processed by NACHA – National Automated Clearing House Association.
In order to be compliant with the rules and regulations set by NACHA, we monitor the 3 types of ACH return rates, and give you a series of warnings if your returns pass those thresholds.
- Unauthorized returns
- Administrative returns
- Overall returns
- Return codes
- Ways to reduce receivables returns
- Ways to reduce payables returns
Unauthorized return rates include:
- R05 - Unauthorized debit to consumer account using corporate SEC code
- R07 - Authorization revoked by customer
- R10 - Customer advises not authorized
- R29 - Corporate customer advises not authorized
- R51 - Item Related to RCK (Re-Presentation Check Entry) entry is ineligible or RCK entry is improper; The RCK format is used to represent a returned check, through the generation of a single entry ACH debit.
All payments returned due to the return reasons above divided by the total count of payments will equal the unauthorized return rate.
The unauthorized return rate cannot be higher than 0.5%.
Administrative return rates include:
- R02 - Account closed
- R03 - No Account/unable to locate account
- R04 - Invalid account number
All payments returned due to the return reasons above divided by the total count of payments will equal the administrative return rate.
The administrative return rate cannot be higher than 3%.
All returned payments divided by the total number of your payments gives the equal the overall return rate.
The overall return rate cannot be higher than 15%.
|R01||Insufficient funds||Available balance is not sufficient to cover the amount of the debit entry|
|R02||Bank account closed||Previously active amount has been closed by the customer of RDFI|
|R03||No bank account/unable to locate account||Account number does not correspond to the individual identified in the entry, or the account number designated is not an open account|
|R04||Invalid bank account number||Account number structure is not valid|
|R06||Returned per ODFI request||ODFI requested the RDFI to return the entry|
|R07||Authorization revoked by customer||Receiver has revoked authorization|
|R08||Payment stopped||Receiver of a recurring debit has stopped payment of an entry|
|R09||Uncollected funds||Collected funds are not sufficient for payment of the debit entry|
|R10||Customer advises not authorized||Receiver has advised RDFI that originator is not authorized to debit his bank account|
|R11||Check truncation entry return||To be used when returning a check truncation entry|
|R12||Branch sold to another RDFI||RDFI unable to post entry destined for a bank account maintained at a branch sold to another financial institution|
|R13||RDFI not qualified to participate||Financial institution does not receive commercial ACH entries|
|R14||Representative payee deceased or unable to continue in that capacity||The representative payee authorized to accept entries on behalf of a beneficiary is either deceased or unable to continue in that capacity|
|R15||Beneficiary or bank account holder||The beneficiary entitled to payments is deceased, or the bank account holder other than a representative payee is deceased|
|R16||Bank account frozen||Funds in bank account are unavailable due to action by RDFI or legal order|
|R17||File record edit criteria||Fields rejected by RDFI processing (identified in return addenda)|
|R18||Improper effective entry date||Entries have been presented prior to the first available processing window for the effective date.|
|R19||Amount field error||Improper formatting of the amount field|
|R20||Non-payment bank account||Entry destined for non-payment bank account defined by reg.|
|R21||Invalid company ID number||The company ID information not valid (normally CIE entries)|
|R22||Invalid individual ID number||Individual ID used by receiver is incorrect (CIE entries)|
|R23||Credit entry refused by receiver||Receiver returned entry because minimum or exact amount not remitted, bank account is subject to litigation, or payment represents an overpayment, originator is not known to receiver or receiver has not authorized this credit entry to this bank account|
|R24||Duplicate entry||RDFI has received a duplicate entry|
|R25||Addenda error||Improper formatting of the addenda record information|
|R26||Mandatory field error||Improper information in one of the mandatory fields|
|R27||Trace number error||Original entry trace number is not valid for return entry; or addenda trace numbers do not correspond with entry detail record|
|R28||Transit routing number check digit error||Check digit for the transit routing number is incorrect|
|R29||Corporate customer advises not authorized||RDFI has been notified by corporate receiver that debit entry of originator is not authorized|
|R30||RDFI not participant in check truncation program||Financial institution not participating in automated check safekeeping application|
|R31||Permissible return entry (CCD and CTX only)||RDFI has been notified by the ODFI that it agrees to accept a CCD or CTX return entry|
|R32||RDFI non-settlement||RDFI is not able to settle the entry|
|R33||Return of XCK entry||RDFI determines at its sole discretion to return an XCK entry; an XCK return entry may be initiated by midnight of the sixtieth day following the settlement date if the XCK entry|
|R34||Limited participation RDFI||RDFI participation has been limited by a federal or state supervisor|
|R35||Return of improper debit entry||ACH debit not permitted for use with the CIE standard entry class code (except for reversals)|
Ways to reduce receivables returns
In order to be compliant with the rules and regulations set by NACHA, you are required to obtain signed authorization from your customers to charge their bank account via ACH. You acknowledge this when you click Authorize within your Bill.com account before charging any customer for the first time.
When you add a customer's bank account, be sure to confirm there are no debit blocks and the account is eligible for ACH debits.
If more than 0.5% of ACH debits from your customers' bank accounts are returned as unauthorized, it may be an indication that you have not obtained the required pre-authorizations. Your agreement with your customers should:
- Include the required EFT debit authorization, which can be found in The ACH Rules for Originators
- To access the most up-to-date edition of “Operating Rules of the National Automated Clearing House Association,” go to: http://www.achrulesonline.org/ and create a free account by selecting Basic User. Your company must comply with Article Two of “Operating Rules” (aka the ACH Rules for Originators).
- Clearly state the company name that will show on your customers' bank statement, as the originator of the ACH debit
- These rules also require that you keep signed authorization on file for at least two years after the authorization has been terminated or revoked, and you must be able to provide copies of any written authorization forms upon request
Ways to reduce payables returns
If the debit to your bank account for payables payments fails, we send you a notification email. If we void all associated payments, the email subject line is “You're unable to pay vendors for < your company name >." If we request a wire to cover payments, the email subject line, “URGENT - You need to wire us funds to pay vendors for < your company name >.”
These failed funding incidents are calculated into the return rate.
We suggest you set up your bank account to always approve Bill.com debits. See Using Bill.com's ACH ID to bypass a debit block on your bank account.
In addition, we suggest always ensuring you have sufficient funding in the account for the payments that are scheduled to process.
Lastly, always have up to date bank information in Bill.com, and deactivate any old bank accounts that are no longer in use to avoid any errors in selecting the wrong bank account.