× FreshBooks App Logo
FreshBooks
Official App
Free - Google Play
Get it
You're currently on our US site. Select your regional site here:
5 Min. Read

What Is a Prenote Authorization? Definition & Meaning

What Is a Prenote Authorization? Definition & Meaning

Pre-note authorizations are a way for banks to confirm the information that you provide for direct deposit is accurate.

Have you ever given your direct deposit information in order to get paid? You might remember seeing a prenote authorization on your account or pay stub. Did you wonder what it was?

It might not have been for any amount and it could have even happened at a different time than when you normally get paid. It doesnā€™t happen all the time, but some companies choose to confirm the account details you provide when setting up direct deposit. This is called a prenote authorization.

Hereā€™s What Weā€™ll Cover:

What Is a Prenote Authorization?

How Does the Prenote Process Work?

Key Takeaways

What Is a Prenote Authorization?

A prenote authorization is simply a test to make sure that the banking information you provide is correct. Before youā€™re able to get paid, a pre-note will sometimes get sent in order to process your direct deposit. Donā€™t worry, though. It doesnā€™t affect your pay at all.

More often than not a prenote authorization will have no dollar amount and will be accompanied by a transaction code. The code indicates that itā€™s a prenote authorization and might also specify if itā€™s a savings or checking account. Itā€™s an optional step to verify account details but it helps to avoid any possible errors.

Account information might get manually entered, either by you or someone else, which makes mistakes possible. However, the pre-note should also come with an expiration date. This is the last possible date and time that the banking information can get confirmed before a paycheck is sent. If it isnā€™t confirmed by the expiration date then the information will get considered accurate and direct deposit will happen.

https://www.staging.freshenv.com/signup

How Does the Prenote Process Work?

Itā€™s a really simple process as itā€™s only meant to confirm the accuracy of the banking information provided. But the pre-note expiration date is important to be aware of. It works like this:

  • If there is no pre-note expiration date or if it expires before the check date, a direct deposit will get made to the account
  • If the pre-note expiration date expires on or after the check date, the direct deposit information will not get processed

Your payroll department will use the banking information you provide and make a prenote authorization to the account. If thereā€™s an accounting error or it canā€™t get deposited for some reason, that tells your payroll department that the information isnā€™t correct. They will reach out to you to have you confirm your banking details and provide updated information.

As mentioned above, there is usually an expiration date that goes with a prenote authorization. Your payroll department will try and process your details before the expiration date. That way if there are any errors they have time to get updated information and input it into the system before your check gets issued. It will help avoid any delay in you receiving your payment.

That said, sometimes things can happen that are out of your control and the expiration date can pass. If that happens, there might be a different payment option, like a paper check. All it means is that there wasnā€™t enough time to confirm your direct deposit details before payroll was processed

Key Takeaways

Thereā€™s nothing worse than having your paycheck get delayed. You have spent all that time and effort the past few weeks doing the best possible job you can. Itā€™s almost the weekend and you have plans to get away and relax. Plus you have bills to pay. 

Pre-note authorizations are put in place to help and make sure that you do get paid. Not every company or banking institution uses them, but sometimes they do happen. So if you see a prenote authorization pop up or if your payroll department reaches out to you because something is wrong, now you know why.

Itā€™s a simple tool to try and spot any errors in the bank account information that you provide to receive your payments by direct deposit. It doesnā€™t usually take too long and itā€™s usually done well before your paycheck is scheduled to get processed.

This helps to make sure that if there are any errors in the information your payroll department has enough time to correct the details. Pre-notes can be more common for companyā€™s where direct deposit information is manually submitted by their employees. It helps to avoid any accidental errors. 

Check with your payroll department if you have a question about a pre-note approval status. They can also let you know about different payment methods or your overall payment process. 

Are you looking for more guides like this? Heave over to our resource hub!


RELATED ARTICLES