While it may appear to be a commodity service, it takes extensive experience and a commitment to excellence to ensure that ACH payroll processing is done properly, so that payroll providers have peace of mind that their clients' employees are paid the right amount, on time – every time.
How can you ensure that you're doing your part internally, and how do you choose the right ACH payroll processing partner? We've prepared these best practices to guide you.
Build Internal Checks & Balances
- Establish dual control for file upload/transaction initiation: this minimizes the risk of any felonious activity and also prevents errors and irregularities, and identifies problems
- Create Redundancy Among Your Staff: avoid payroll problems when those with primary responsibility are away from the office for any reason by training at least one back-up staff member
- Reconcile Accounts in a Timely Manner: we recommend a daily reconciliation, which is where our Quantum automated payroll reconciliation solution shines
- Review ACH Policies & Procedures Periodically: we recommend doing so on an annual basis
- Keep Appropriate & Accurate Records: you want a paper (or electronic) trail for troubleshooting should something go wrong (and it will)
Choose a Third-Party Wisely
Considering that so many banks offer ACH direct deposits as a service, here's what we recommend for finding the right third-party ACH payroll processor:
- Checks & Balances: finding a partner that can help you establish the internal checks and balances mentioned above
- Have a strong knowledge of NACHA rules and regulations, including Phase 1, 2 and 3 of Same Day ACH
- Understanding of the entire payroll process: instead of payroll being a "side" business
- Has a crime bond in place: provides protection for your ACH transactions – the FDIC does not insure ACH transactions, only a bond does – just make sure the amount of the bond is sufficient
- Web-Based Software: ability for you to access and edit your direct deposit information from any device, wherever you are, giving you full autonomy
Third-Party ACH Payroll Processing Software
To expand on the last point in the section above, we recommend evaluating third-party ACH payroll processing software based on whether or not it offers the following capabilities:
- 24/7 Online Access: mobile friendly, anytime access that allows you to delete, edit or suspend transactions without having to call someone
- Automatic Return Notification: proactive communication
- Custom Reporting: ability to create your own reports in addition to standard reporting
- Real-time Checks for Batch & File Errors: eliminate mistakes before it adversely affects your employees
- Double-Entry System: prevents issues with lost transactions and makes reconciliation easier
Questions to Ask Third-Party ACH Payroll Providers
Lastly, getting answers to the following goes even further to ensure you choose the right ACH payroll processing partner:
- Do you have a team or department that manages ACH processing only for your clients?
- When is the daily cut-off for uploading our payroll files, and what happens if a change is needed after that cut-off?
- Are you SOC 1 certified?
- Do you require your ACH clients to adhere to a quarterly or annual audit?
- Do you require that we register all of our clients with NACHA?
- What are your reserve requirements?
- Are we required to establish a line of credit to process ACH transactions?
- What are your processing requirements?
- How many days prior to check date does our NACHA formatted file need to be uploaded to your system?
- Can we process varying types of payroll related transactions through your system, including 401(k) payments, child support and garnishments?
- Are there any daily or file dollar volume limitations on the ACH files we will process?
We want you to make a well-informed choice even if you don't choose Cachet Financial Services because we've seen so many payroll providers burned in the past.