What is an addenda record?

If you make ACH payments on a regular basis, you may already be familiar with the concept of addenda records. If not, it’s definitely something that could be worth exploring in greater depth. From the benefits of ACH addenda records to the standard Nacha addenda record format, we cover everything you need to know about addenda records. Get the inside track with our comprehensive guide.

Understanding ACH payments

Before we get onto the nitty-gritty of addenda records, it’s crucial to have a robust understanding of ACH payments. To refresh your memory, ACH payments (also called ACH transfers or ACH transactions, are electronic bank-to-bank payments for US businesses.

ACH payments are made using the ACH network instead of card networks like Visa or American Express. The two primary categories of ACH payments are Direct Deposits and Direct Payments. They take around three working days to process and offer a broad range of benefits for businesses and organizations, including low fees and a reduced risk of involuntary churn.

Addenda records explained

So, first question – what is an addenda record? An addenda record, often referred to as an ACH addenda record or a Nacha addenda record, is a type of ACH record that provides the supplemental data needed to identify an account holder or provide payment information to the receiver or RDFI. In other words, it’s the information required by the Department in an Automated Clearing House credit or wire transfer.

What is the ACH addenda record format?

Addenda records are generally used for ACH CCD+ and ACH CTX transactions (a popular transaction type for corporate payments). According to the rules of Nacha – which are available from Nacha or your local ACH organization – addenda records are optional, which means that you don’t need to include them if you don’t want to. It’s also important to note that you can only have one addenda record with each ACH payment and that the record will immediately follow the transaction.

When it comes to the Nacha addenda record format, it’s important to note that formatting is mainly dependent on the ACH format that you’re using. Here’s an example of the CCD+ ACH addenda record format:

Bottom line – you have 80 characters of free-form text to provide payment-related information.

What are the benefits of ACH addenda records?

There are several significant benefits associated with addenda records. First and foremost, ACH addenda records are one of the best ways to provide additional transaction information. In a sense, they’re like memos or notes, providing supplementary information about specific payments. If you deal with hundreds or even thousands of ACH payments over the course of a standard month, using addenda records can be an effective way to stay on top of your payments.

It’s also important to note that providing payment-related information in an addenda record can simplify record-keeping and make the reconciliation process far easier for your accounting team. Finally, an ACH addenda record provides both financial institutions involved in the ACH transaction an opportunity to communicate extra information, thereby improving communication and ensuring that all payments are made as simply and quickly as possible. 

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