Ensuring employees get paid on time is critical. In the restaurant business, there can be some special challenges in accomplishing that goal — and that’s one reason why same-day Automated Clearing House (ACH) payment capability has been a godsend for one company.
The company, with more than a dozen restaurants, first experienced the value of same-day ACH on Friday, January 13, 2017 - yes, Friday the 13th - the first payday of the new year.
The previous day this growing business experienced an internet outage while transmitting ACH payroll files. When the company's controller received her ACH report late on that Thursday, the report didn’t include payroll for one of the company's restaurants. The controller wasn’t alarmed, because she knew it could just be a reporting glitch, and she made a note to check on the New Orleans restaurant's payroll the next day.
On Friday morning, she received a call from the manager at the restaurant, who reported nobody there had been paid. Her first thoughts: OK, I’ve got 100 employees who need to get paid today — what do I do? She could try to courier checks to them, but they reside all across the area and many don’t have a local bank where they could cash the check.
The company's controller called Sara Aucoin, her treasury management sales specialist at Hancock and Whitney Bank, and said: “I know you have been talking about your new same-day ACH capability. I’m in a bind. Is there any way you could make that happen today?”
And the bank did.
Issuing a same-day ACH credit requires a company to transmit a properly formatted file to the bank by noon in order to ensure recipients have funds in their account by end of day. The controller started working with Aucoin and members of our Treasury Services Support team at 10 a.m. They spent about 45 minutes on the phone until everything was set up correctly and the company was able to transmit the file successfully.
All of the employees at the company's restaurants got paid on payday. Problem solved!
Discovering more uses
Once the restaurant company was set up for same-day ACH, the controller quickly found other uses for it.
In the restaurant business, there’s a lot of turnover in hourly positions — such as dishwasher, busser and runner — which means the company was regularly bringing on new employees. In order to get paid on time, those employees must provide the controller with certain information, and sometimes they don’t do that until the last minute. But now, with same-day ACH, if an employee can provide her with that information by early payday morning, they get paid that day.
A variety of issues regularly lead to the need to transfer funds to an employee immediately — everything from correcting a payroll shortfall to meeting emergency travel expense needs — and now she can address those situations with same-day ACH.
The restaurant company has also started paying vendors with same-day ACH under certain circumstances. For example, it has liquor vendors that want to be paid in 14 days. If there’s a delay in processing an invoice, day 14 comes around fast. When that happens and the vendor needs to be paid today, the controller can now generate a same-day ACH.
The company has three restaurants with accounts at other banks, because there are no Hancock or Whitney branches near them. Now the controller uses same-day ACH instead of wire transfers to move funds between those accounts and their accounts at Hancock and Whitney.
Enhancing the company's ACH initiative
The company started using Hancock and Whitney’s ACH services in 2015 for direct deposit of payroll, and today it has a mandate to pay all of its employees that way. Furthermore, in the last six months the business began converting vendor payments to ACH, and within the next six months the controller hopes to have 80%-90% of them converted.
ACH is a very easy and safe way to transfer funds. It’s automatic. Recipients receive their funds next day. Companies don’t have to print, stuff and mail checks, and reconcilement is simplified.
Indeed, standard ACH is a cost-effective alternative to both checks and wire transfers. And now when a standard ACH payment won’t meet the controller's timing needs, she turns to same-day ACH. At a fraction of the cost of a wire transfer, same-day ACH transaction is a great value.
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