2.2 Company/Batch Header Record (Type 5) & Service Class Codes

2.2 Company/Batch Header Record (Type 5) & Service Class Codes

The Company/Batch Header Record (Type 5) acts as the internal envelope of an ACH transmission. It establishes the legal identity of the Originator, defines the payment application via the Standard Entry Class (SEC) Code, dictates directional constraints through the Service Class Code, and specifies the targeted settlement timing.

Under Nacha Operating Rules, an ODFI may package multiple batches within a single ACH file. However, batch uniformity is absolute: every Entry Detail record inside a given batch must conform to the parameters defined in its Type 5 header.

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The Rule of Batch Uniformity

An ACH batch cannot contain arbitrary mixtures of payment types or dates. All entries enclosed between a Type 5 header and its corresponding Type 8 control record must share:

1. Identical Standard Entry Class (SEC) Code (e.g., all PPD entries or all CCD entries; an ODFI cannot mix PPD and CCD within the same batch).
2. Identical Company Identification and Company Name (all entries must originate from the same legal entity or corporate client).
3. Identical Effective Entry Date (all entries must target the same settlement date).
4. Permissible Service Class Code Alignment (e.g., debit transactions cannot appear in a credit-only batch).

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Field-by-Field Specification: Company/Batch Header (Type 5)

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Deep Dive: Service Class Codes (200, 220, 225, 280)

The Service Class Code in Positions 02–04 defines the permissible cash-flow directions for all entries in the batch. ACH Operators validate every Entry Detail record against this code during file ingestion.

+-------------------------------------------------------------------------+
| SERVICE CLASS CODES                                                     |
+------+-----------------------------+------------------------------------+
| Code | Classification              | Permissible Transaction Codes      |
+------+-----------------------------+------------------------------------+
| 200  | Mixed Debits and Credits    | Debits (27, 37, 47, 57) &          |
|      |                             | Credits (22, 32, 42, 52)           |
+------+-----------------------------+------------------------------------+
| 220  | Credits Only                | Credits (22, 32, 42, 52) &         |
|      |                             | Zero-Dollar Prenotes (23, 33, 43)  |
+------+-----------------------------+------------------------------------+
| 225  | Debits Only                 | Debits (27, 37, 47, 57) &          |
|      |                             | Zero-Dollar Prenotes (28, 38, 48)  |
+------+-----------------------------+------------------------------------+
| 280  | Automated Accounting Advice | Exclusively ADV entries            |
|      | (ADV)                       | (Generated by ACH Operator)        |
+------+-----------------------------+------------------------------------+

Operational Impact of Mismatched Codes

• If an ODFI transmits an ACH batch with Service Class Code 220 (Credits Only) that accidentally contains a debit entry (e.g., Transaction Code 27), the ACH Operator rejects the entire batch with an acknowledgment error (INVALID SERVICE CLASS / TX CODE MISMATCH).
• Batching corporate payroll disbursements under 220 protects the Originator from accidental debit initiation.
• Recurring utility collections are batched under 225 (Debits Only).

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Effective Entry Date vs. Settlement Date

A central concept tested on the AAP exam is the chronological handoff between the Originator-specified Effective Entry Date and the Operator-assigned Settlement Date.

1. Effective Entry Date (Positions 70–75)

• Format: YYMMDD (e.g., October 24, 2026 is 261024).
• Role: Populated by the Originator/ODFI to indicate the specific banking day on which funds should transfer and settle between ODFI and RDFI.
• Same Day ACH Initiation: Originating a batch with the current banking day's date (or a stale date / blank under Same Day ACH rules) submitted prior to a Same Day ACH processing cutoff triggers Same Day clearing and settlement.
• Forward Dating Windows:
  • Standard ACH Credits: May be submitted up to 2 banking days in advance of Effective Entry Date.
  • Standard ACH Debits: May be submitted up to 1 banking day in advance of Effective Entry Date.

2. Settlement Date (Positions 76–78)

• Format: 3-digit Julian Date DDD (e.g., February 1 is 032, August 24 is 236).
• Crucial Rule: When the ODFI generates and transmits the Type 5 record, Positions 76–78 must be filled with three blank spaces ( ).
• Operator Action: The ACH Operator calculates the actual settlement date based on deposit windows, banking holidays, and processing schedules, overwriting positions 76–78 with the Julian day before delivering the batch to the RDFI.

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Nacha Rules for Company Entry Descriptions

The 10-character Company Entry Description (Positions 54–63) is mandatory and critical for consumer disclosure under Regulation E. The Receiver's financial institution must print this description on the consumer's periodic account statement.

Special Mandatory Descriptions

Nacha Operating Rules strictly mandate specific wording for certain operational scenarios:

1. REVERSAL: Mandatory when originating a reversing batch or file to correct an erroneous payment (e.g., duplicate payroll or wrong dollar amount). Using any other term violates Nacha rules.
2. RETRY PYMT: Mandatory when re-presenting an eligible consumer debit that was previously returned unpaid due to R01 (Insufficient Funds) or R09 (Uncollected Funds).
3. REDEMPTION: Commonly required for mutual fund or investment liquidations.
4. RETURN CR / RETURN DB: Utilized in operator and RDFI return generation.