The Rules Behind Reinitiated Entries

Amy Donaghue

By: Emily Nelson, AAP, Manager, Advisory Services

Let’s talk about the basics when it comes to Reinitiated Entries – why they’re used, the requirements for formatting and how to identify them.

When Should You Reinitiate an Entry?

The ACH Rules state that an Originator or ODFI may Reinitiate an Entry for one of the following reasons:

  • Returned for insufficient or uncollected funds;
  • Returned for stopped payment and Reinitiation has been separately authorized by the Receiver after the Originator or ODFI receives the Return Entry; or
  • The Originator or ODFI has taken corrective action to remedy the reason for the return.

A common example is when an ODFI attempts to transmit loan payment Entries after they have been returned for insufficient or uncollected funds. Keep in mind, the ODFI has not yet charged back the loan for the insufficient return in this example. This means the reinitiated Entry transmitted by the ODFI is contingent upon the original Entry being Returned as insufficient. Therefore, the ODFI’s next step would be to ensure that the reinitiated Entry is transmitted with the correct formatting.

What is the Correct Formatting for Reinitiated Entries?

The correct formatting for reinitiated entries can be found on page OR 37 of the 2021 ACH Rules in Subsection, Formatting Requirements for Reinitiated Entries. According to this subsection, an Originator or ODFI must submit Reinitiated Entries as a separate batch that contains the word “RETRY PYMT” in the Company Entry Description field of the Company/Batch Header Record. The “RETRY PYMT” must replace the original content of this field for the original Entry, including content otherwise required by the Rules.

You may be asking yourself how to identify the Company Entry Description field easily, and the best way would be to look at the descriptive information attached to the payment. For example, if you take our hypothetical scenario from above, often loan payments are transmitted with the description of “loan payment” and this descriptive information is commonly placed within that Company Entry Description field. For the Reinitiated Entry, this field must become “RETRY PYMT”. The Rules are very specific regarding the spelling and capitalization requirements as well; this field must contain exactly “RETRY PYMT”. The other formatting requirements of Reinitiated Entries include that the Company Name, Company Identification and Amount fields must be identical to the original Entry. This simply means the company originating the Entry has to remain identifiable to the Receiver as in the original Entry and that the amount of the Entry must be for the amount originally authorized by the Receiver.

What if Your System Automatically Transmits Reinitiated Entries?

First, you will want to check that any internal origination entries that you are reinitiating are being transmitted with the required “RETRY PYMT” within the Company Entry Description Field. Again, you can check for this by looking at the descriptive information that is being transmitted with the Entry. Try testing your system by verifying that “RETRY PYMT” appears within the Company Entry Description field for outgoing Reinitiated Entries. As mentioned above, it is required that the alpha characters be in all capital letters. Second, if you identify that your system is automatically filling the Company Entry Description field with the description from the original Entry you will need to reach out to your system provider to inquire as to how to remedy the error. It may be that your system provider can instruct you on how you can make those changes, or it may be something they will need to change on their end.

As always, if you ever have any questions about Reinitiated Entries, or anything else payments-related, give us a call! We are always happy to answer questions. Reach out to us via phone (800.500.0100), email (memserve@epcor.org) or by chatting with us on our website (epcor.org). Or, if you’re interested in having an outside party check your compliance related to Reinitiated Entries and all of the other ACH Rules requirements, schedule your ACH Risk Assessment and ACH Audit services today by contacting audit@epcor.org!

Dealing with Your Annual Audit? We Can Help!

Regulators and the ACH Rules require all financial institutions to conduct an ACH audit annually. If you are conducting your audit internally, our fully interactive ACH Audit Workbook will eliminate guesswork and guide you through the process. Check it out!