<div dir="ltr">Thank you so much to everyone who replied to my inquiry about processing ACH payments. I received a lot of information! It will be very helpful moving forward. I have compiled the responses below. I also received some policies and forms as attachments. I have those if you are interested. Thanks again! You are all so lovely. What a great profession!<div><br></div><div><p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">1. The only regular ACH debit we typically authorize is for
our payroll processing company. However,
their software development team had a big screw-up a month ago and debited us
for over $224,000 in error. They
corrected it the same day, but it shook our confidence in the security of ACH.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">As of this morning we have instituted ACH Positive Pay with
our primary bank, which is making me feel much more comfortable. If a larger amount than we typically allow is
presented, we have the option to stop the payment. </p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif"> </p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">2. First you need to have a board-approved Electronic
transactions policy. Ours states the board approves a list of vendors
authorized to receive ACH payments, and they review and approve that list at
least once a year.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">Procedurally, invoices we want to pay via ACH go through the
same process as checks. Our AP person puts them in Quickbooks, prints a list
for the check run that I review and approve, then she prints the checks.
Anything on that list that we want to pay via ACH instead of a check, she does
not print a check but instead she fills out the ACH authorization form
(attached). Two board members sign the checks and the ACH forms. The ACH form
authorizes me to go into our bank account to initiate the payment, which per
bank procedure is released by a separate library employee. Then the employee
who releases the payment goes back into Quickbooks to mark the item as paid via
ACH. Reports of all checks and ACH payments are included in the board packet
for final approval.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">The struggle we have had is that not all vendors are set up
to accept ACH payments in which we push the money to them like a direct
deposit. They want us to give them the library’s bank account number so they
can pull the money out. We don’t do that. Those vendors are stuck getting a paper
check.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif"> </p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">3. Our board approved specified accounts for ACH payments.
We use Quickbooks, these bills and payments are entered as usual with check
number "ACH". These are included in our Check Detail report as part
of the treasury report that is approved by the board each month.</p><p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif"><br></p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">4. In DeWitt, we paid many things by either ACH or automatic
payment. We were trying too cut down on
written checks whenever possible. We
developed a written library policy with the assistance of Foster Swift. Once the policy was approved, our procedure
was:</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">Whenever we wanted to pay a vendor through ACH, it first had
to be approved by the Board.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">Approval for the ACH to that vendor wad added as an agenda
item for the next meeting.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">Once the Board approved the vendor, we would set up the
payment.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">ACH payments would then be listed on the financial reports
each money like other payables (and approved like a check).</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">If the auditors had questions about an ACH, they would go
back to Board minutes and verify that the Board had approved ACH payment to
that vendor.</p><p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif"><br></p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">5. We had to put an ACH Policy into place before we could
move to ACH transactions for paying bills (or offering direct deposit!) was an
ACH policy. We followed a template - it's here if you'd like to look at it -
<a href="https://drive.google.com/file/d/1HaFvPGFYSI2L8XvQoYF75sMb35kiHTte/view?usp=drive_link">https://drive.google.com/file/d/1HaFvPGFYSI2L8XvQoYF75sMb35kiHTte/view?usp=drive_link</a></p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">As far as process & approvals go, in my own
experience(s), when we pay bills online we still have to create a voucher/paper
trail for it. My board approves it after the fact. We use a service called
SignNow for e-signatures, and I can go back and pull out any voucher at any
time if there's a question from a member, vendor or board member - the service
saves/archives them for us, and my admin also has the paper versions that get
audited and live with our permanent financials. Going with ACH transactions
cuts down on checks being sent by mail, but it definitely does not cut down on
the overall use of paper.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">When I worked at Lapeer, we had a Finance Committee (Board
treasurer and another board member) that would meet ahead of the scheduled
board meeting to go over the "post audits" - the bills that had
already been paid, to double check & verify numbers, and to authorize &
pay the current bills - we did a lot of check signing and initialing on those
days. I don't know if they still use that system or if they have changed things
up, but it worked well at the time - I'm sure there were efficiencies to be
found at some point along the way.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">Also in my experience, auditors don't care what you do or
how you do it, as long as they can find what they need at audit time. It's when
they can't find proof or documentation or the policy that supports the
proof/documentation that things get complicated.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif"> </p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">6. We are just in the process of transitioning to ACH
payments. We use Chase bank, and they have an electronic payment system called
Cashflow 360, which is powered by Bill.com. We have tried to duplicate the
approvals process we have in place for regular checks, which require the
approval of two signers from our bank account. There are three of us in our
Admin department who are signers: the Operations Manager, Assistant Manager,
and myself. In a nutshell, our Financial Coordinator receives the invoices and
enters them into Cashflow 360. To enter the bills, she just has to forward the
electronic invoice to our Chase inbox, or scan and upload. Cashflow 360 has AI
features, and it will actually populate fields and seems to be improving in
accuracy the more we use it, which is totally mind-blowing to me!</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">Once everything is entered and coded, two of the three
signers need to login in and review the payments, then click a button to
approve. Once that happens, the payments are submitted. If we don’t have ACH
info for the vendor, the bank mails them a check, similar to how you might pay
a bill from your own bank’s website. We will provide a report for our board to
approve in our consent agenda, just like a check register.</p><p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif"><br></p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">7. We don't have a lot of items that we ACH for, but for the
most part, we pre-approve payments for a number of ACH transactions before the
beginning of our fiscal year. This includes payroll, payroll taxes, one utility
company, and one other thing I can't think of at the moment. They are also
included in my list of checks made in my board packets every month which the
board "approves." We did have a situation, before the utility company
was on our pre-approved list, where we had our treasurer (who is a second signer
on our checks) initial it before the due date and when it actually went through
and was charged.</p><p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif"><br></p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">8. We have a very simple system that I have used for the
past five years in my role here with Lapeer District Library.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">It was taught to me in my orientation training.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">We print out a physical copy of all our bills.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">When I pay a bill, I take the printed copy of the bill and
use that information to put the details into Quickbooks.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">I have a log sheet where that bill is numbered to correspond
to that same number in Quickbooks.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">That number is also written in the upper right hand corner
of each bill I process.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">Prior to a board meeting, all of my totals are tallied up on
my cover log sheet and it is clipped to the front of the pile of bills.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">My director double checks to make sure all is in order.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">I then proceed to copy them for the board packets.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif"><br></p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">The board treasurer and finance committee meet right before our board meetings. </p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">They review the financials and then approve them for the
record.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">In this presentation they are able to see all charges and
dates items were paid.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">The results will be affirmed and approved during the board
meeting.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">This system has worked for our library system because we are
a Class 6 library and this is manageable.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif"> </p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">9. We currently have limited ACH payments related to payroll
– direct deposits, taxes withheld and miscellaneous payroll deductions. We have
a debit block on our checking account and these companies are set up as
“allowable” with maximum dollar amount withdrawals. The related invoices are
processed in our financial software (BS&A) and approved by the appropriate
department head or director. The system approval is what we use as our approval
for the ACH payments.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">We are fortunate in that we remit payment for all
expenditures approved within our annual budget and provide our board with a
monthly check register for them to see the activity and question anything that
looks suspicious.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">We discussed more secure payment methods with our Commercial
Banker and recently obtained a purchasing card. We will use the purchasing card
to make as many online payments as we can, such as library materials purchases
and DTE, but we will not use it for vendors that charge a fee. We are just in
the beginning stages, so we also need to update our procedures. We are also
looking into utilizing our banks online payment service. This is all new to us,
but I do look forward to running some thoughts by our auditors next week to see
if they will provide us some direction in regards to best practices for
internal controls in these circumstances.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif"> </p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">10. We are a class 4 library and do the following for all
types of payments:</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">Bill comes in.
Reviewed by either AD or Director for accuracy. The opposite person enters bill into
Quickbooks—this gives our small organization a separation of duties for
accounting standards. The physical bill
is annotated with budget line payment comes from, date of payment, and account
payment comes out of. The Secretary and
Treasurer are signers and must approve all bills (though the treasurer said if
they ever can’t come soon enough, they will sign after the fact). Either one stops by when there are a few
bills to pay and signs check and initials the bill paperwork. Then the Director will either mail the paper
check or set up an ACH payment through our bank. I will update the quickbooks entry with the
ACH confirmation number we get from our bank.
Then, we scan the paper bill into a folder to be given to our auditor at
end of year. I have attached a sample of
a bill for you. </p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif">As far as auditors go, we use Siegfried Crandall and they
are enormously helpful in answering questions….just a thought for your future. Please
note, we do our own payroll and bookkeeping in-house. My predecessor stayed a couple extra months
to train me and the new AD on our library’s accounting procedures. We save a lot of money this way. I have had to learn the chart of accounts
from the state of Michigan, but totally worth it.</p>
<p class="MsoNormal" style="margin:0in 0in 8pt;line-height:107%;font-size:11pt;font-family:Calibri,sans-serif"> </p><div><br></div><span class="gmail_signature_prefix">-- </span><br><div dir="ltr" class="gmail_signature" data-smartmail="gmail_signature"><div dir="ltr"><div>Tracy Logan<br>Library Director<br>Cadillac Wexford Public Library<br>411 S. Lake Street<br>Cadillac, MI 49601<br>231-775-6541<br><a href="mailto:logant@cadillaclibrary.org" target="_blank">logant@cadillaclibrary.org</a></div></div></div></div></div>