Our finance department has given certain vendors our corporate credit union account information (routing/account #) for them to pull ACH transactions. While they’d prefer to push the funds via ACH to the vendor, some larger vendors are insistent on pulling funds. The vendors provide information/invoices in advance to support the amount of the transaction they’ll be originating. Invoices are reviewed by vendor owners/finance. Finance subsequently verifies the amount of the transaction through online banking access and reconciles the related accounts monthly. All vendors that pull funds by ACH have gone through the vendor due diligence process. As a business, we’d also have two days to dispute an improper ACH transaction should it occur, so assuming someone is reviewing the activity in the Corporate CU account daily I think the controls are pretty solid.
Our Risk Manager has concerns about allowing vendors to do ACH pulls since there is no way to limit the amount of their pulls. If someone at the vendor went rogue, they could pull unlimited funds. Our Finance Manager has suggested some alternatives, but none are easy fixes and all add to their workload. I’m hesitant to support adding burden to the Finance department when the existing controls seem solid.
My questions are:
Does your credit union allow vendors to pull funds by ACH if they insist on being paid this way?
If so, do you have any additional controls in place that I haven’t mentioned above?
Does anyone use a separate account/sub-account for all vendor ACH pull transactions, keeping limited funds there until the invoice is received and then transferring the funds to the sub-account? This was one of the solutions offered, but the timing seems like it could get tricky to me.
Any other thoughts?
