Q&A: Adjustments

Q&A: Every question deserves an answer...

Balances, charges, and fees are sent on an EDI 822 file.  What happens if something was sent incorrectly or omitted entirely?  Usually, a bank sends a restated 822 file with the mistakes now corrected.  But, when a restated 822 file is not sent, any adjustment is made.

Adjustments (ADJs) are made on the bank's end, sent on the EDI 822 file, and then applied to the appropriate balances.

What is sent on the EDI 822 file?

From my end, I cannot see when the bank has made an adjustment until it is sent on the EDI 822 file.  At that point, I can tell...

1. Which charge/balance the ADJ is for
2. The amount of the ADJ
3. The original charge/balance amount
4. Whether the ADJ is for the current or prior period
5. When the original transaction requiring the ADJ occurred 
6. How the ADJ is being applied

Adjustments can be sent for either a ledger balance, float balance, or service charge.  All three have specific ways in which they must be formatted on the EDI 822 file according to AFP standards to signify to which of the above 3 areas the ADJ is for.  But, banks cannot just send the ADJ information alone.

Application is important...

There are 2 balances in particular whose sole purpose is to apply ADJs for either the ledger or float balances.

• Balance Adjustment – Prior Period Ledger
• Balance Adjustment Prior Period Average Float

Let's say your EDI 822 file has an ADJ for Ledger.  Based on the information sent you can see how ledger was adjusted, by how much it was adjusted, and for which period the adjustment applies.  The same goes for any float adjustment.

For service ADJs, these should be sent as service line items in the account's service detail section of the EDI 822 file.  Some are sent with "credit" or "adjustment" in the service description with the charge sent as a negative or positive to deduct that amount from the total service charges due.  But, each bank is different.

Without sending Balance Adjustment – Prior Period Ledger for a ledger ADJ, Balance Adjustment Prior Period Average Float for a float ADJ, or an adjustment service line item - the ADJs will not apply towards your final balances/charges so the information on the 822 file becomes nothing more than a memo entry.

Happy Analyzing!

*Have an Account Analysis question? Send me an email girlmeetaa@gmail.com