Direct deposit allows your employees to have their paychecks deposited directly into their bank accounts. Banks require electronic delivery of payroll information by companies that provide their employees the option of direct deposit. Sage 100 Contractor supports the creation of a file in automatic clearing house (ACH) format. You then send this file to your bank. Your bank extracts the records from the file and creates files that are routed through ACH providers to the various employee banks. 

1. Obtain the account and routing numbers from each employee for the bank accounts into which they want their paycheck deposited.
2. Determine if your bank requires a pre-notification.
3. Contact your bank to determine any delivery requirements, including encryption, additional file format requirements, or other requirements specific to an individual bank. 

To set up and process a direct deposit for your employees, follow these steps:

1. Enter your bank account information into Sage 100 Contractor.
   1. Open 7-1 Company Information, Payroll Direct Deposit Setup tab (In versions 19.8 and earlier, 7-2 Company Information).
   2. In the Account # box, enter your bank account.
   3. In the Routing# box, type the company s bank routing number.
   4. From the Account Type menu, select the company's bank account type.
   5. Select or clear the Include Company Debit Line, Include Optional Hard Return, and Include Option 9 Fill boxes according to the preferences of your bank.
      Note: If you have questions about which boxes to select, contact your bank.
   6. From the File menu, Save
2. Set up employee records for direct deposit.
   1. Open 5-2-1 Employees.
   2. Display the employee.
   3. Click the Direct Deposit tab.
   4. Select the Enable Direct Deposit box.
   5. In the Status drop, select 3-Active.
      Note: Banks may require you to process a pre-notification (pre-note) to verify the account numbers are valid. Before you process a direct deposit batch, contact your bank to determine if a pre-note is required. If a pre-note is required, stop here, and refer to the steps in How do I create a pre-notification (pre-note) for direct deposit. After you have obtained verification from your bank that you can process the employee's direct deposit, continue with section D below.
   6. Select the Account Type.
   7. In the Routing# box, type the routing number of the employee's bank.
   8. In the Account# box, type the employee s bank account number.
   9. From the Rate Type menu, select the type of deposit. For information on each Rate Type, refer to the attachment below.
   10. In the Amount/Rate box, type the rate.
   11. If you wish to email this employee their direct deposit paystub, type their email address in the Direct Deposit Email box.
   12. From the File menu, select Save.
   13. Repeat steps 3-10 above for each employee.
3. Create a pre-note (if required by your bank).
   Note: If you are required to process a pre-note, please see Article ID 18246 for detailed steps. If you are not required to process a pre-note, continue to the steps below.
4. Process the direct deposit.
   1. Open 5-2-2 Payroll Records and enter the employees timecards.
   2. Open 5-2-3 Compute Payroll and compute payroll as usual.
   3. Open 5-2-4 Payroll Checks, select 22-Payroll Checks~Direct Deposit, and print payroll checks.
      Note: Printing direct deposit payroll checks creates non-negotiable checks and supplies the employee with a record of the payroll.
   4. Open 5-2-5 Direct Deposit File Manager.
   5. In the Payroll Check Date box, type the check date.
   6. In the Deposit Date box, type the deposit date.
   7. Click Start.
   8. Click OK to the message, ### records will be processed for direct deposit.
   9. After the direct deposit file is processed, the Select destination file screen appears.
   10. Select the location in which to save the file and click Save.
       Notes:
       • This is the direct deposit file you send to the bank.
       • The default file location is \\ServerName\(company name)\Direct Deposit\Payroll.
   11. Click OK to the message, Direct Deposit Process Complete.
   12. Click Yes to the message, Do you want to print the Direct Deposit file report?
   13. From File menu, Print.
   14. Review the report to verify all the information on the report is correct.
   15. Open 5-1-2 Payroll Check Register and select the register you want to print.
   16. From File menu, Print.
   17. Review the check register to verify all the information is correct.
   18. Open 5-2-6 Post Payroll to GL and post the payroll.

Your direct deposit is now set up, processed, and ready to upload to your bank. Contact your bank for procedures on how to upload the direct deposit file to your bank.

Note: If the bank indicates the records must be 94 characters, the box Include optional hard return in menu option 7-1 Company Information must be selected.

For additional setup information, see the articles linked in the Related Solutions section.