Positive Pay - Sandler*Kahne Software, Inc.

Appendix A - Pre-NotificationExplained (EFT, US only)As of March 21, 1997, thewaiting period for prenotificationchanged from 10calendar days to 6 bankingdays.Pre-notification is part of the standard method of transmitting information to theAutomated Clearing House (ACH). As of September 20, 1996 the NACHArules no longer require using the pre-notification process. After reviewing theexplanation below, please consult with you bank to determine whether you mustor should use the pre-notification process.With pre-notification, you provide a way for your bank to verify vendor bankaccount information before transactions are actually posted to the vendoraccount(s). A pre-notification record contains only the vendor's name andaccount identification. No payment amounts are included. When you send thepre-notification record, you are advising your bank that, in a followingtransmission of an ACH file, you will be sending amounts to be posted to thisaccount. It is an opportunity for the bank to verify that the account informationis correct before actual posting to the account is required.The bank must respond to you within 6 banking days if the account informationcannot be verified. If the bank does not contact you after 6 banking days, youmay assume that the account information is correct, and then are free to transmitamounts to those accounts.AP EFT provides the control you need for this process. Whenever a new bankID or account number is entered for a vendor (either for a new vendor or as achange to a current vendor's account information), the software will set the Pre-Note Status flag to "N" (New pre-note) for the changed account. When creatingan ACH file, all vendor records are examined, and when a “N”ew Pre-Notestatus record is found the appropriate pre-notification record is included in theACH file. When this transmission batch is “Kept”, AP EFT then changes thePre-Note Status to "P" (Pending re-notification).With the new automatic pre-note approval processing, the program willautomatically determine the approval date (6 banking days after the pre-note istransmitted), and approve all vendors after that waiting period. Note that youmay still manually move a pending pre-note to approved. Once a vendor is“Approved” (or “Pending” but the Approval Date has been reached), then ACHtransmissions may occur.If a second pre-notification is required for any reason (e.g., the bank reported anerror in the account number, a communications failure, etc.), you must make anycorrection necessary, and change the Pre-Note Status back to "N," and thenrepeat this process.NOTE FOR ELECTRONIC TAX PAYMENTS:Your financial agent’s account should have a “zero dollar” entry sentbefore making any tax payments. A “zero dollar” entry is the same as apre-notification, except that it must be used for the CCD+ entry class.By sending the “zero dollar” entry and waiting until approved, you willreduce the tax liability if your payment was not received due toinaccurate information.2 • Appendices A/P Electronic Funds Transfer w/ Positive Pay