| With the automatic prefund policy in place, it is ill-advised to attempt to sweep debit funds into an escrow or holding account for use on payday. Using the example below, one can clearly see why the time needed to process the transactions makes this type of set up impractical. (To earn interest on the funds, they would need to be in the payroll processor's account overnight.) XYZ Payroll Services is set for a 1 day prefund requirement. They wish to debit the employer and credit their own account 1 day prior to payroll. In order for this to happen, the following time line must be followed: Friday is targetted pay date. Monday - XYZ Payroll Services uploads a file with a debit to the employer and a credit to themselves. Both items are to be dated for Wednesday. AllianceACH Gateway changes the date of the debit so that it is sent out Monday night. Additionally, the uploaded file will contain a debit to XYZ Payroll Services for the amount of payroll and credits to the employees - all of which are to be dated for Friday's pay date. (Note: If the debit to XYZ Payroll Services and credits to the employees is not in this file, it can be uploaded as a seperate file no later than Wednesday at 5pm pst.) Tuesday - Debit to employer hits account. Tuesday evening credit to XYZ Payroll Services is sent out. Wednesday - Credit to XYZ Payroll Services is received. Debit to XYZ Payroll Services to cover employee credits is sent out that evening. Thursday - Debit to XYZ Payroll Services hits account. That evening, credits to employees are sent out. Friday - Employee credits are received. As you can see, this example would require that the employer get XYZ Payroll Services his hours or total of payroll on a Monday for an upcoming Friday pay date. Some might suggest that the debit and the credit could both be sent to XYZ Payroll Service's account on Thursday - allowing for the time line to begin on Tuesday rather than Monday. It should be noted, however, that there is no guarantee to how a bank will process incoming items - the debit could post before the credit which might result in an overdraft charge. Also, the point of sweeping funds into your own operating account would be to earn interest. Unless the funds sit in the account overnight, no interest is earned. It is for these reasons that we do not advise attempting to sweep funds into or out of your own operating account.
Jessica Benzakein
Senior Operations Analyst / ISO Manager
Alliance Payment Technologies
302 S. Milliken Ave, Suite G-1, Ontario, CA 91761
P: 800.675.1330 x4206 F: 866.316.3898
Merchant Support: 800.923.8652
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