What is the purpose of an addenda record in ACH payment entries?

The purpose of an addenda record in ACH (Automated Clearing House) payment entries is to provide payment-related information. This additional data helps clarify or specify details about the transaction that may not be included in the standard payment entry.

Addenda records can contain various types of information, such as invoice numbers, account references, or other relevant details necessary for the payee to reconcile payments accurately. These records enhance communication between the payer and payee by offering context and specifics about the nature of the payment, which is especially important for business transactions that involve multiple invoices or account reconciliations.

The incorporation of addenda records into ACH transactions thus facilitates smoother financial operations and record-keeping, allowing both parties to have a clear understanding of what each payment represents.