Managing Payroll Transactions in Friday #

This article explains how payroll transactions work in Friday, including company debits, employee direct deposits, timing, failed payments, reversals, refunds, and transaction statuses.

Payroll Transactions Overview #

A payroll transaction is any movement of money related to payroll. There are two main types:

• Company Debit: Money collected from the company bank account to fund payroll, taxes, and other payroll-related costs.
• Employee or Tax Payment: Money sent to employees, contractors, or tax agencies.

Company Bank Account Debits #

Timing of Debits #

• Company debits are usually submitted for processing on the payroll approval deadline.
• The debit typically posts to the company bank account between 12:00 PM ET and 11:30 PM ET on the approval deadline date.
• Once payroll is approved, the debit process usually begins shortly after and cannot always be stopped.

Bank Debit Blocks #

• Some business bank accounts have debit blocks for security.
• If your account has a debit block, your bank may reject the payroll debit unless Friday is authorized to debit the account.
• To avoid payroll funding failures, contact your bank and ensure Friday payroll debits are allowed.

Employee Direct Deposits #

Timing of Deposits #

• Employee direct deposits are generally processed before payday so funds can be available on the scheduled pay date.
• Most direct deposits are available by the morning of payday, but the exact time depends on the employee’s bank.
• Some banks post funds immediately, while others may post later in the day.

Cancellations and Reversals #

• Cancellation: A direct deposit may be canceled if it has not passed the cancellation cutoff. If already sent or posted, cancellation may not be possible. Contact Friday support as soon as possible.
• Reversal: An ACH direct deposit may be reversed within a limited time after payday, but only for specific reasons allowed under ACH rules. Reversals cannot be undone once successful. Instant or real-time payments cannot usually be reversed.

Failed Payments and Retrying Transactions #

Payroll Debit Failures #

• ACH bank payments can sometimes be returned after initially appearing successful.
• A company debit may first show as paid, but later update to failed if the bank returns the transaction.
• Common reasons for failure include insufficient funds, bank blocks, closed accounts, incorrect account information, or other bank-related issues.

Actions After Debit Failure #

• Payroll funding may need to be resolved before payroll can be completed or before future payrolls can be processed.
• Friday may allow the payment to be retried by ACH or require the company to fund payroll by wire.
• Wire funding is often faster because it settles more quickly than ACH.

Retrying Failed Transactions #

• In many cases, a failed company debit can be retried by ACH or by wire if immediate funding is needed.
• ACH retries may take longer to settle, and ACH rules limit how many times the same debit can be retried.
• If an employee payment fails or is canceled, Friday may retry the payment to the same or a new employee bank account. Employees should update their bank information if it was incorrect.

Refunds to Employer #

• If an employee payment failed or was canceled, Friday may refund the funds back to the employer instead of reissuing the direct deposit.
• If the employee is still owed the money, the employer must pay the employee manually (e.g., by cash or paper check).

Transaction Statuses #

Below are common payroll transaction statuses and their meanings:

| Status | Description |
|———————–|———————————————————————————————-|
| Draft | The transaction has been created, but money movement has not started yet. |
| Pending | The transaction is being prepared for processing. |
| Processing | The transaction has started processing. |
| Paid | The transaction completed successfully. (ACH transactions may still fail later.) |
| Canceled | The transaction was canceled before completion. |
| Failed | The transaction failed immediately or was returned after initially showing as successful. |
| Refund Processing | The transaction is being refunded to the employer. |
| Refund Failed | The refund to the employer failed. |
| Refunded | The transaction was successfully refunded to the employer. |
| Reversal Processing | A reversal from the employee’s bank account is being processed. |
| Reversal Failed | The reversal from the employee failed. |
| Reversed | The reversal from the employee succeeded. In most cases, a refund to the employer follows. |

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FAQ #

Why was my bank account debited before payday? #

Your company bank account is usually debited before payday so funds can be collected and sent to employees on time.

Why did my employee not receive their direct deposit first thing in the morning? #

Most direct deposits are available in the morning, but the exact posting time depends on the employee’s bank. Some banks may post funds later in the day.

Can Friday stop a payroll debit after payroll is approved? #

Once payroll is approved and the debit process begins, the debit usually cannot be canceled. Contact support immediately if there is an issue.

What should I do if my company debit failed? #

Contact Friday support as soon as possible. Depending on the situation, the debit may be retried, or you may need to fund payroll by wire.

Why did my debit fail if the bank account has enough money? #

A debit can fail for reasons besides insufficient funds. Common reasons include bank debit blocks, incorrect account information, closed accounts, account restrictions, or bank security settings.

What is a debit block? #

A debit block is a security feature on some business bank accounts that prevents outside companies from pulling funds unless the bank has been instructed to allow it.

Can I reverse an employee direct deposit? #

Sometimes, but only if the payment qualifies under ACH rules and is still within the allowed reversal window. Contact Friday support immediately if you believe a payment needs to be reversed.

Can instant payments be reversed? #

No. Instant or real-time payments are generally final and cannot be reversed.

What happens if a direct deposit was sent to the wrong account? #

Contact Friday support immediately. Depending on the payment type and timing, options may be limited. The employee may also need to work directly with their bank.

If an employee payment fails, do I need to pay them manually? #

Not always. Friday may be able to retry the payment. If the payment cannot be retried or is refunded to the employer, the employer must pay the employee manually.

Who should I contact for help with a payroll transaction? #

Contact Friday support at support@fridayapp.com.