Prenote Meaning
A prenote (short for “pre-notification”) is a test transaction sent through the Automated Clearing House (ACH) network before setting up direct deposit. Employers use prenotes to verify that an employee’s bank account number and routing number are valid.
The prenote is a zero-dollar ACH entry, no money moves, but it ensures the direct deposit system works correctly before actual payroll is sent.
Why is a Prenote Used in Payroll?
- Verification – Confirms the accuracy of employee banking details.
- Error Prevention – Helps avoid rejected payments or misdirected funds.
Compliance – Many payroll providers and banks recommend prenotes as part of the ACH direct deposit setup.
According to Nacha (the organization that oversees ACH payments), prenotes are an important safeguard in the electronic payment process.
How Long Does a Prenote Take?
A prenote usually takes 3 business days to process. During this time:
- The employer submits the prenote through payroll.
- The bank validates account and routing information.
- If no errors are reported, the direct deposit is ready to start.
Prenote Example in Payroll
For example:
- A new employee provides their direct deposit details.
- Before payday, the payroll provider sends a prenote.
- The employee still receives their first paycheck via paper check.
- Once the prenote is validated, direct deposit begins for future paychecks.
Prenote vs Direct Deposit
| Feature | Prenote | Direct Deposit |
| Amount Sent | $0.00 (test only) | Employee’s wages |
| Purpose | Verify account info | Transfer funds |
| Processing Time | 3 business days | Paid on payday |
| Risk of Error | Prevents issues | Can fail if prenote not done |
Prenote in Payroll Systems
- Prenotes are common when employers issue salary certificates or official documents showing income and banking details.
- In multi-state payroll, prenotes help confirm that routing numbers work across different banks and states.
- Once prenote verification is done, deductions such as union dues or post-tax deductions apply normally.
FAQs on Prenote
Q1. What is a prenote in payroll?
A test ACH transaction ($0.00) to verify account details before starting direct deposit.
Q2. Does a prenote transfer money?
No, it only checks if the account information is correct.
Q3. How long does a prenote take?
Typically 3 business days.
Q4. Do all employers use prenotes?
Not always. Some use instant verification instead.
Q5. Is a prenote required by law?
No, but many payroll providers recommend it.
Q6. Can prenotes delay paychecks?
Yes, employees may get a paper check during the prenote period.
Q7. Do prenotes appear on a bank statement?
Usually not, since the transaction is $0.00.
Q8. What happens if a prenote fails?
The bank alerts the employer to correct the account info before deposits begin.
Q9. Are prenotes part of ACH payments?
Yes, they are ACH pre-notifications used to validate details.
Q10. Do garnishments or deductions apply during prenote?
No, they only apply once direct deposits start.
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