The Prenote Process
Payroll | Aug 18, 2021
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Today, many employees are paid via direct deposit. By receiving their funds electronically, an employee avoids the hassle of cashing a paper check each pay period.
Instead of a paper check, an employee with direct deposit gets a statement that details their earnings and deductions. By using an employee self-service solution – such as MyStack – an employee can receive this statement electronically as well. This is an easy way for a company to move towards a paperless payroll.
But before an employee can use direct deposit, their account information needs verified. This is done through the prenotification process, or a “prenote.”
What is a prenote?
A prenote is a test transaction that a bank uses to validate account and routing information. This helps ensure that any funds are deposited into a valid account.
When is a prenote sent?
After you enter or update an employee's account or routing information, a prenote is sent with the next processed payroll.
How long does a prenote take?
The prenote process usually takes 10 days to complete.
During this time, the employee will receive a live paycheck.
Typically, an employee receives a live paycheck after signing up for direct deposit. This could continue for one or two pay periods. Once the account information is verified, an employee's pay will be direct deposited; that employee will no longer receive a live paycheck.
However, if an invalid account or routing number is detected, then the employee will continue to receive a live paycheck. After correcting any detected errors, another prenote is sent. This process is repeated until the account(s) are verified.
When is a prenote needed?
A prenote occurs anytime an employee signs up for direct deposit or when you edit an employee's existing account information.
Keep in mind, any time a prenote is sent for an employee’s account, that employee will receive a live paycheck. An employee will be paid by direct deposit once the verification process is completed and the account information is verified.
The following chart shows what actions lead to a prenote being sent:
|Action||Is a prenote required?|
|An employee signs up for direct deposit.|
|An employee adds another bank or an additional account to their current direct deposit.|
|You change an employee’s name, address, or other demographic information.|
|An employee switches banks.|
An employee changes their deposit distribution
(i.e. instead of 10% going to a savings account, they make it 20% of their pay).