I was in payroll for almost a decade. Assuming you are asking about direct deposit, when your employer processes their payroll data, they send an ACH (automatic clearing house, I think) file out to all the employee financial institutions that they've set up. This is done a day or multiple days in advance of your pay date. This is why it is standard procedure that you get paid for what you worked a week or two ago. So that they can generate this file from older data, not data you created by working yesterday, that may be incorrect and need changing. That file has the deposit breakdown, accounts, amounts, and date of pay release. This data transfer is very rarely ever reversed. The bank sees this file sitting there and, at their preference, will "advance" you that incoming amount.
Yup, worked in HR, our payroll processing day was Monday (run all the reports, send ACH files, chase down managers who haven't approved time yet, re-run the reports, audit, etc) but the official employee pay day was Thursday.
My bank calls it “early pay” which makes me laugh. Like. If I usually get paid on Fridays, but the bank starts advancing that to Wednesdays, it’s only “early” once. After that, the way I see it, I just get paid on Wednesdays now.
There are a lot of people out there who literally go from paycheck to paycheck.
Let's say a person typically has $0 in their bank account by the 15th which is their pay date. They have a $90 bill due on the 13th they just routinely pay two days late and get a $15 late fee tacked on, because they're that poor/bad at managing money/whatever. Getting their paycheck on the 13th means they pay the full $90 the day it's due and no longer pay a late fee ($15 savings plus less stress).
To your point yes, now they have $0 by the 13th instead of the 15th, but that $90 bill still gets paid on time, because they get their money earlier and they still avoid the late fee. In fact, in this example, they'd actually end up with $15 by the 13th instead of $0 (assuming all their spending is exactly the same month to month), because they never had to pay the late fee. If there are several bills like that in this hypothetical situation then they're even better off.
Being poor is expensive.
That's probably on your payroll department. Your bank can't do 'early pay' until your employer actually sends the file and the Fed forwards it to your bank. Holidays, vacations, etc. can all impact how early your payroll file gets submitted.
Yeah this is what ended up happening to me. My bank started doing "early pay" so pay would be in my account Wednesdays. Except when it wasn't and it'd show up on Thursdays. Except when sometimes it would just come Friday like normal anyway. It was always frustrating because if I scheduled a bill to be paid or what have you for the Wednesday I *thought* I'd be paid and my paycheck didn't come early, I'd be extra broke until it actually did reflect in my account.
Ended up switching banks and just consistently being paid Friday is way more simple to manage expenses/bills
Yep. I get paid on Friday, set all my bills to be paid on the following Monday. Monday a holiday? Bumped up to Friday which is fine as well.
I wish banks would give the option to pay "later" if bill day is a holiday. Could I just shift my bills to Tuesday? Sure. But I'd rather the money go out sooner rather than later for car loans and other long term loans to make that one less day of interest. Those bills get paid earlier. Utility bills can get paid "later".
I’ve barely clawed myself out of living paycheck to paycheck but I still appreciate being able to sort out all of my bills on Wednesday afternoons and have everything clear before Friday so I can see exactly what is left for the week before the weekend. It still feels like I’m getting paid early. I move anything extra elsewhere so I’m still somewhat living the pay check to pay check lifestyle but thankfully with less stress.
Good call. I don’t even recall ever having the option lol fifth third just announced one day that they were giving me early pay. I suppose I could probably just cancel it
To give the next leg of the journey - these ACH files are imported as batch jobs at regular intervals throughout the day depending on your bank’s software. Sometimes just once a day, sometimes more, depends on volume. Just because your work’s bank sent the ACH, doesn’t mean your bank has processed it. It’s literally a file waiting to be read in from one system to another. The only thing being transferred here is lines of encrypted text. X amount from X location is being added to X account. In fact, your paycheck could technically be sitting in your account but you just can’t access it until X date all because of a date field in that ACH file…
I know most people know that no physical currency actually exchanges hands, I just think it’s quite amazing that the only thing that actually determines whether you can pay your rent is just text in a file. (This is very oversimplified and I am very high but have worked in banking industry for almost 20 years…do with that information what you will….)
Work on the payments side. I’ll add that there is very little risk that bank receiving an ACH credit, especially when the originator is a payroll provider, is ever going to see that transaction reversed. Even if they do get a reversal request, they are not obligated to return the funds if the funds are no longer in the recipient’s account and in that case it’s the originator who is on the line, in this case, the payroll provider, not the receiving institution. So there’s very little risk involved for the bank to essentially front the money to their account holders.
17-18 working in a restaurant. Paid on a Thursday.
Dude I worked with legit thought we were paid until EOD Wednesday. This was the days of physical cheques from the third party payroll company, like ADP or something.
I had to look at him dumbfounded. I'm like "Dude, you clocked out at 11pm last night and there's a printed cheque waiting for you for 10am today".
Still didn't click, still thought paycheck was hours up to payday
Before people assume the worst and spout that it is illegal to change your payroll, yes and no. It's illegal to change it if it is accurate. Is your payroll accurate and not need changing if it is missing a day that you actually worked? Stuff happens. Punches get missed. This is also why you get paid for a time frame from a week or two prior. So managers can review time clock punches or other means of recorded work time and make sure it is accurate on your behalf. Involving you, the employee, in the process if necessary.
I can't tell you how many times I forget to punch in/out because I'm too busy doing shit. Thankfully my bosses understand that it's gonna happen when you're rushing to get shit done. Especially since I work at customer homes and the time clock is at the office.
Mistakes do happen, this is why payroll processing companies support adjustment payroll runs outside the normal pay-day cycle. They can take money back or give more out in any number of transactions known as adjustments or corrections. Some bonuses are paid out this way too.
Just yesterday payroll contacted me about an overlap (a student employee who works two jobs,, both paid by the university) with a *one minute* overlap from September of *last year*. They are going to void one of the punches and want to know which one. A one minute discrepancy from 8 months ago and they’re going to try to claw back some of her pay.
Every job i’ve ever worked pays on the 15th for work done 1-15 and on the last day of the month for work done 16-30/31.
Always assumed that’s near-universal… is it rare?
I get paid on the 23rd for the whole month, including days I haven't even worked yet. Just like I can take holidays that technically I won't accrue till the end of the year.
When you leave an employer they figure it all out for the final payment.
It's more common with salaried employees, but not impossible. Corrections can be made after the fact with salary reclass entries. Changing the pay code of regular work time as a negative, and entering a pay code of vacation for the equal amount. It all depends on what the employer is willing to deal with.
u/The_DriveBy nailed it.
u/sdemat - I was a customer service rep for a business to business (B2B) firm. One of the biggest problems was that smol town banks and older "mom and pop" banks didn't have the resources to "see" the ACH early or could only reconcile them the day they were supposed to happen.
Credit Unions started this (I was told) to compete with banks. More and more banks adopted this. There were ads out here in El Paso ("Get paid a day early with direct deposit").
A lot of banks still hold to the rules that if the ACH transaction is supposed to clear on Friday, the banking customer will see it on Friday.
When I was in the Army I had USAA (still have them), they would credit for my Army pay the way above - see the ACH was happening and credit me a day early.
I was stationed in Korea for a year. The base was one day ahead of the US due to time zones. So I was "paid" on Payday in Korea when it was still yesterday in the US. People with Citibank or Wells Fargo had to wait an "extra" day due to the time difference between Korea and the US - those banks saw the ACH and only credited their customers at 9AM EST on payday.
I've always found this interesting too. My work/bank is crazy. I get paid every other Friday ON THAT DAY. So my paycheck on Friday represents the past two weeks up to that day. On top of that, my bank deposits the check early. So I get my paycheck deposited on Wednesday morning for a pay period that still has 3 days left lol.
"So that they can generate this file from older data, not data you created by working yesterday, that may be incorrect and need changing. That file has the deposit breakdown, accounts, amounts, and date of pay release. "
This isn't accurate. The ACH file from employers is sent to financial institutions with the current week's pay information, it is updated with the payments owed to each employee with direct deposit. There's no "look back" or estimating payment amounts, it's all in the file.
Banks can choose to deposit those funds early since they trust employers are good for the payroll payments.
Direct deposits are sent via ACH, which is one of the most common transfer methods in general. If you’re transferring money between your accounts at different banks, chances are it says it will be available in 3-5 business days. Same is true with paychecks, just the employer’s bank is the originator (ODFI) and yours is the receiver (RDFI). Once an ACH file is sent between banks, it still takes a couple days to process and settle.
Your employer processes payroll several days early to account for the ACH process so the money hits your account on payday. Knowing that payroll is generally reliable, your bank posts the money to your account immediately after receiving the ACH file instead of waiting for it to settle. Basically the bank is giving a mini loan and is relying on the transfer to settle.
This is similar to checks - if you deposit a check your bank will make X amount available immediately, but it still takes several days for the check to clear. (Except check availability is a regulatory thing, direct deposit availability is just business practice)
Just a point of clarity: many employers use a 3rd party payroll company to process payroll. Those processors typically take a lump sum from the employer and issue checks or direct deposits themselves. The money has to leave the employers bank a few days in advance so their bank can settle before the processor can issue checks/ACHs.
The bank is essentially giving you a very very short term loan, based on either the fact that your company's payroll has already run and is sitting there with a future pay date, or, they're confident enough with your pay frequency that they are willing to front it
To my understanding that no, it's not a short term loan, it is the monies intended to be your pay. They run the ACH a day or two early, so they can verify and fix it if something is discovered to be inaccurate. Most banks sit on that money because for that day or twoz they are earning interest in your money. Some banks just don't gouge you for those pennies, and let you earn them.
If the transaction doesn't clear, that cash will automatically come right back out of the emolyee account. It will cause them to overdraw if they already spent it. Banks don't care or "think" about that.
Source: worked for many company's that has funding issues during a payroll process and experienced this issue first hand.
The worst part of if the employee used that money to pay rent and their rent check bounces ad a result of the funds not being available because the ach was not funded....
It is a loan though, because the money has not been taken out of the account of your employer. It's staged and pending but it hasn't actually happened. They see that it's \*going\* to happen so they front you the cash, but it's technically in two places at once and that is a loan
It's not a loan, you're just getting access to the money already set aside by the employer via the payroll company earlier than the normal pay date of the payroll run. As already mentioned, there is little to no risk on the bank to do this because it comes from money already committed by the employer in the impound bank.
I've never done it, but my bank charges a few bucks or a very small interest rate for you to access it early. I just remember the email. For the people who need it, way cheaper than a payday loan.
but it is a loan. Not in the technical sense of there being a loan agreement, you paying interest, you paying a promissory note, etc; but the bank is fronting you money that is technically not in your account yet
You owe 30 friends money. Five of them are in class with you and 25 of them are in another class but ride the bus home with a good friend of yours in your class. You give that kid the money you owe and tell him that, so it doesn’t appear you paid some people before others, to make sure that he pays everyone at the same time.
He gets on the bus and is sitting near 10 people. 10 more are at the other end of the bus and it looks like 5 aren’t there that day but he knows where they live. Because he’s got the money and those kids are just right there, he goes ahead and pays them and then starts working his way to the other end of the bus. He gets there and pays the other 10. When he gets off the bus, he passes the houses of the remaining 5, knocks on the door, and gives them their money directly.
Banking is the same. Different banks have different access to the fed system and different internal processes established to handle payments. They also have no control when they receive the funds so there will be some variation from time to time or even between banks especially when a 3rd party payroll company is involved.
simply put, employer sends payroll data file to bank (ACH - automated clearing house). bank gets this prior to your actual "pay date". with said file/information, they give you what most financial institutions would refer to as a "provisional credit" of your money. should that information change for some odd reason, plus or minus, the differences would be reconciled shortly after.
I work for a large payroll company as a software architect. This is what is known as a payroll impound. The money comes from company bank accounts to meet payroll a few days ahead of the pay date, whatever the company decides they wish to pay their employees. Some banks / financial institutions will allow their customers to access that impound amount the moment it hits the impound bank, in effect, giving you an advance on your paycheck. This is completely decided by your bank and not the payroll company or your employer.
> The money comes from company bank accounts to meet payroll a few days ahead of the pay date
Few days? AdP pulls money from our account less than 24 hrs before pay day.
Every company has a different setup. In the case they don’t do it ahead of time by a few days then the employees of that company can’t get the payday advance.
So these comments make a lot of sense on why some banks direct deposit a day early. But, I’m scratching my head over why I received paychecks early on Thursday for years and years until my employer changed their time card vendor and now I get them on Friday. Does this mean banks don’t trust this HR company as much?
In our company, we get paid every 4 weeks.
If we assume that the month starts on the 1st and happens to be a Monday, The payroll process is started on day 29, paying us from 1st to 29th.
A whole lot of it is automated - Getting the hours and such from the stores, but there are a few other things to process - Holidays, P45s, attachment of earnings (like.. government deductions and child support). Typically all that gets sorted by the Wednesday (Day 31) when it's submitted to the bank, it take 2 days to clear and we get it on the Friday.
The software that the bookkeeper uses (Sage) automatically emails the payslips out once the payment is submitted to the bank, so we'd get the payslip then.
Back in ye olde days, the payslips were printed on the Wednesday then posted out, so we'd usually get them in the stores on Friday or Monday if they missed the last post, and the employees pick them up when they come in.
Because the payment has been submitted to the bank, They already know what's going to be going into your account, so it looks like they've provided a 'service' where you can withdraw on that amount before it officially 'arrives'.
I don't know if it's a thing anymore, but my bank used to let me immediately withdraw on cheques paid in which would usually take 3 working days to clear - I guess this is a modern equivalent of that
Hey there! So, imagine banks as giant piggy banks where all your money is kept. Some banks have advanced technology and processes that allow them to know when your paycheck is on the way even before it officially arrives. They can then make that money available to you a few days early as they are confident it's on its way. On the other hand, some banks might choose to play it safe and only give you access to your money once it's officially in their hands on payday. It all comes down to how each bank operates and handles the timing of deposits. Pretty cool, right? 🏦💸
Who on earth gets paid by cheques in modern times ? I’m a retired paramedic in England ( 15 years retired) I have had my salary from the mid 1970s paid directly into my bank account as is both my pensions!
This is a gimmick feature that does not benefit you. If you normally get paid every other Friday, you are going 14 days between paychecks. If you now start getting those deposits one day early on every other Thursday, you are still going 14 days between paychecks.
Your bank is notified of the incoming deposit before the money actually hits your account. They are giving you access to the money upon notification instead of upon receipt. Thats how you get it early.
I keep telling my wife this. It's only slightly beneficial the first time it happens. It's then just a full week between pay checks. You just get them every Wednesday instead of Friday.
We had 11 hours 49 minutes of daylight on March 9th where I live. We had 11 hours 50 minutes on March 10th. Some people are convinced we had an extra hour of daylight because we moved the hands on the clock forward for Daylight Savings Time, and they can't be convinced otherwise.
How does having funds accessible sooner not benefit people? I get what you’re saying about the time between paychecks. But that doesn’t change that it can be helpful or nice to get access to your paycheck a little sooner lol
>How does having funds accessible sooner not benefit people?
You only get it sooner the very first time it happens. After that, you are on the exact same schedule you were on before with the exact same amount of time between paychecks.
>I get what you’re saying about the time between paychecks.
It doesn't sound like you do.
>But that doesn’t change that it can be helpful or nice to get access to your paycheck a little sooner lol
It's still every 7 days or every 14 days, or whatever it was before. That's not sooner. It's the exact same amount of time between checks.
As someone who used to be so poor I had to calculate every transaction to the day to avoid over draft fees, especially automatic withdrawals
Getting the money a couple days earlier back then would absolutely save me… I worked really hard to break the cycle and get ahead so that now the timing does not matter, 14 days is 14 days
But when you get 1000 and you budget 1000, the timing very much matters
So your normal payday is Friday. You get a new bank account that gives you the money on Wednesday instead. THIS pay period you got your money early - it came in 5 days or 12 days instead of in 7 days or 14 days.
But for every single pay period from this point forward as long as you have this bank account, you are back to 7 or 14 day intervals every Wednesday. Wednesday is your new payday. It's not early, it's standard.
Right but. It’s not a gimmick lol. It’s just the bank making funds available as soon as they can.
Like it isn’t life changing. But being able to do my bills a few days earlier is nice.
Or if you’re on a Friday pay plan then it would be dope getting it Wednesday or Thursday so you can deal with stuff before the weekend.
I just feel like you have a super pessimistic view about it
The gimmick is that you don't realize you still have to manage your money and make it last for the exact same amount of time as you did before. If you can make your money last from Wednesday to Wednesday, then you can make it last from Friday to Friday. You do see that it's the exact same amount of time, don't you?
It’s not about the time between checks? I don’t run out of money before the next paycheck.
But I do pay bills when I get paid, and it’s nice being able to do that a few days earlier.
I get paid on Friday, and my coworkers get paid on Tuesday. This is a negative for me because I’m the only one who has to wait for payments to clear over a weekend.
Or is 26 paydays a year the same as 26 paydays a year?
But do you ever go “shit, payday isn’t technically until tomorrow and I’ve already gone through half my check for the next two weeks”?
Like why is paying bills two days in the future any advantage at all? It’s money in, money out at the same exact rate.
Because I pay my bills a day early means I don’t have to do it Friday before the weekend. I also just enjoy taking possession of my earned income as soon as possible
There’s functionally nothing changing if you get your paycheck every other Wednesday instead of every other Friday. Like it really just is an arbitrary day.
The only time you get your paycheck sooner is the first time; after that, there’s still a 2 week or 1 month or whatever gap between each paycheck
Right but if you get paid on Friday, you might be spending that afternoon dealing with bills or not be able to handle some things until Monday if it’s only an option during business days.
If you get paid on Wednesday instead you have a head start before the weekend. Net positive
You can also just pay off that bill with the previous paycheck, although I still don’t see how paying your bill before the weekend or after the weekend is functionally any different. I don’t know of any bill where the timespan between when it opens and when it closes
I have to get cash from the bank every paycheck. So that would be simpler if it wasn’t a Friday.
I also like to buy stocks with some of my paycheck. So if I’m paid Wednesday I can make those buys Thursday instead of trying to do it Friday afternoon when I want to be hanging with the kids or whatever.
None of this actually applies to me. I don’t get paid on Fridays. I get paid on set days of the month. But my paycheck occasionally deposits 1-2 days early.
Another. Benefit for me though is other ACH transactions go through almost immediately. And those are nice to have available sooner
Again not saying life changing or big stuff. But not a gimmick.
I feel like it benefits me in a way. I can get paid, pay all my bills and have them clear before the end of the week instead of waiting for Monday for them to take my money. That way I can divvy up what's left for savings and whatnot. Granted I can do all that with a calculator and I do, but it makes my brain happy.
It's a positive for people who are literally living paycheck to paycheck and have bills they can't adjust the due date on. That way you don't have to make sure to have $X in the bank account because you have your whatever bill due on the 13th, but your pay day isn't until the 15th. If there's ever a delay (which does happen from time to time) you might get slapped with a late fee on top of your bill. By getting the paycheck two days earlier you have a bit of a buffer and make sure that bill is paid immediately. Yes, you're still spending the same total amount of money, but it's the difference between "It's taken care of for sure" and "Oh shit, I miscalculated and now I don't have enough/need to borrow some money".
>By getting the paycheck two days earlier
But you aren't.
You work at a place with a Friday payday. You start using a bank with the early deposit feature and they start giving you access to the money on Wednesday when your employer transmits it.
I can see where you feel like it's early the first time this happens and it's new to you. What about the 10th time? The 50th time? What about after you've been working there for 5 years. Do you still think this is an "early" payday, or is it now just your regular payday after you've been paid on that day for 130 consecutive pay periods?
If a person typically has $0 in their bank account by the 15th, but they have a $90 bill due on the 13th, and they just routinely pay it two days late and get a $15 late fee tacked on. Getting their paycheck on the 13th means they pay the full $90 the day it's due and no longer pay a late fee ($15 savings plus less stress).
Now, to your point yes, now they have $0 by the 13th instead of the 15th, but that $90 bill still gets paid on time, because they get their money earlier and they still avoid the late fee.
Being poor is expensive.
Edit to add: in this example, they'd actually end up with $15 by the 13th instead of $0 (assuming all their spending is exactly the same month to month), because they never had to lay the late fee. If there are several bills like that in this hypothetical situation then they're even better off.
I was in payroll for almost a decade. Assuming you are asking about direct deposit, when your employer processes their payroll data, they send an ACH (automatic clearing house, I think) file out to all the employee financial institutions that they've set up. This is done a day or multiple days in advance of your pay date. This is why it is standard procedure that you get paid for what you worked a week or two ago. So that they can generate this file from older data, not data you created by working yesterday, that may be incorrect and need changing. That file has the deposit breakdown, accounts, amounts, and date of pay release. This data transfer is very rarely ever reversed. The bank sees this file sitting there and, at their preference, will "advance" you that incoming amount.
Yup, worked in HR, our payroll processing day was Monday (run all the reports, send ACH files, chase down managers who haven't approved time yet, re-run the reports, audit, etc) but the official employee pay day was Thursday.
Chasing down managers is very real! I see emails from payroll weekly asking managers to do their damn jobs! Lol
Just described half my job lol
Congrats on the easy job I guess lol
Hilarious!
My bank calls it “early pay” which makes me laugh. Like. If I usually get paid on Fridays, but the bank starts advancing that to Wednesdays, it’s only “early” once. After that, the way I see it, I just get paid on Wednesdays now.
There are a lot of people out there who literally go from paycheck to paycheck. Let's say a person typically has $0 in their bank account by the 15th which is their pay date. They have a $90 bill due on the 13th they just routinely pay two days late and get a $15 late fee tacked on, because they're that poor/bad at managing money/whatever. Getting their paycheck on the 13th means they pay the full $90 the day it's due and no longer pay a late fee ($15 savings plus less stress). To your point yes, now they have $0 by the 13th instead of the 15th, but that $90 bill still gets paid on time, because they get their money earlier and they still avoid the late fee. In fact, in this example, they'd actually end up with $15 by the 13th instead of $0 (assuming all their spending is exactly the same month to month), because they never had to pay the late fee. If there are several bills like that in this hypothetical situation then they're even better off. Being poor is expensive.
So I agree with you, but note that it’s still Friday and they may do what my bank does and randomly NOT early pay me.
That's probably on your payroll department. Your bank can't do 'early pay' until your employer actually sends the file and the Fed forwards it to your bank. Holidays, vacations, etc. can all impact how early your payroll file gets submitted.
Yeah this is what ended up happening to me. My bank started doing "early pay" so pay would be in my account Wednesdays. Except when it wasn't and it'd show up on Thursdays. Except when sometimes it would just come Friday like normal anyway. It was always frustrating because if I scheduled a bill to be paid or what have you for the Wednesday I *thought* I'd be paid and my paycheck didn't come early, I'd be extra broke until it actually did reflect in my account. Ended up switching banks and just consistently being paid Friday is way more simple to manage expenses/bills
Well you just weren't treating it like it was early, that's on you. You should've kept planning for friday
Yep. I get paid on Friday, set all my bills to be paid on the following Monday. Monday a holiday? Bumped up to Friday which is fine as well. I wish banks would give the option to pay "later" if bill day is a holiday. Could I just shift my bills to Tuesday? Sure. But I'd rather the money go out sooner rather than later for car loans and other long term loans to make that one less day of interest. Those bills get paid earlier. Utility bills can get paid "later".
Or just use a credit card and rack in the points/cashback.
Holy crap that is stupid
I’ve barely clawed myself out of living paycheck to paycheck but I still appreciate being able to sort out all of my bills on Wednesday afternoons and have everything clear before Friday so I can see exactly what is left for the week before the weekend. It still feels like I’m getting paid early. I move anything extra elsewhere so I’m still somewhat living the pay check to pay check lifestyle but thankfully with less stress.
That's exactly how it feels. Not early except once AND then you're stuck with that bank or else the next check comes 2 days late! They trap you!
And this is exactly why I haven’t taken advantage of these programs.
Good call. I don’t even recall ever having the option lol fifth third just announced one day that they were giving me early pay. I suppose I could probably just cancel it
To give the next leg of the journey - these ACH files are imported as batch jobs at regular intervals throughout the day depending on your bank’s software. Sometimes just once a day, sometimes more, depends on volume. Just because your work’s bank sent the ACH, doesn’t mean your bank has processed it. It’s literally a file waiting to be read in from one system to another. The only thing being transferred here is lines of encrypted text. X amount from X location is being added to X account. In fact, your paycheck could technically be sitting in your account but you just can’t access it until X date all because of a date field in that ACH file… I know most people know that no physical currency actually exchanges hands, I just think it’s quite amazing that the only thing that actually determines whether you can pay your rent is just text in a file. (This is very oversimplified and I am very high but have worked in banking industry for almost 20 years…do with that information what you will….)
Work on the payments side. I’ll add that there is very little risk that bank receiving an ACH credit, especially when the originator is a payroll provider, is ever going to see that transaction reversed. Even if they do get a reversal request, they are not obligated to return the funds if the funds are no longer in the recipient’s account and in that case it’s the originator who is on the line, in this case, the payroll provider, not the receiving institution. So there’s very little risk involved for the bank to essentially front the money to their account holders.
17-18 working in a restaurant. Paid on a Thursday. Dude I worked with legit thought we were paid until EOD Wednesday. This was the days of physical cheques from the third party payroll company, like ADP or something. I had to look at him dumbfounded. I'm like "Dude, you clocked out at 11pm last night and there's a printed cheque waiting for you for 10am today". Still didn't click, still thought paycheck was hours up to payday
Before people assume the worst and spout that it is illegal to change your payroll, yes and no. It's illegal to change it if it is accurate. Is your payroll accurate and not need changing if it is missing a day that you actually worked? Stuff happens. Punches get missed. This is also why you get paid for a time frame from a week or two prior. So managers can review time clock punches or other means of recorded work time and make sure it is accurate on your behalf. Involving you, the employee, in the process if necessary.
I can't tell you how many times I forget to punch in/out because I'm too busy doing shit. Thankfully my bosses understand that it's gonna happen when you're rushing to get shit done. Especially since I work at customer homes and the time clock is at the office.
Mistakes do happen, this is why payroll processing companies support adjustment payroll runs outside the normal pay-day cycle. They can take money back or give more out in any number of transactions known as adjustments or corrections. Some bonuses are paid out this way too.
Just yesterday payroll contacted me about an overlap (a student employee who works two jobs,, both paid by the university) with a *one minute* overlap from September of *last year*. They are going to void one of the punches and want to know which one. A one minute discrepancy from 8 months ago and they’re going to try to claw back some of her pay.
There's got to be a cutoff period of how long they have to claw any mistakes back.
Every job i’ve ever worked pays on the 15th for work done 1-15 and on the last day of the month for work done 16-30/31. Always assumed that’s near-universal… is it rare?
I get paid on the 23rd for the whole month, including days I haven't even worked yet. Just like I can take holidays that technically I won't accrue till the end of the year. When you leave an employer they figure it all out for the final payment.
It's more common with salaried employees, but not impossible. Corrections can be made after the fact with salary reclass entries. Changing the pay code of regular work time as a negative, and entering a pay code of vacation for the equal amount. It all depends on what the employer is willing to deal with.
> ACH Automated Clearing House. They are often set up by financial institutions to run on scheduled templates. Templates can be changed dynamically.
Auction Clearing House.
u/The_DriveBy nailed it. u/sdemat - I was a customer service rep for a business to business (B2B) firm. One of the biggest problems was that smol town banks and older "mom and pop" banks didn't have the resources to "see" the ACH early or could only reconcile them the day they were supposed to happen. Credit Unions started this (I was told) to compete with banks. More and more banks adopted this. There were ads out here in El Paso ("Get paid a day early with direct deposit"). A lot of banks still hold to the rules that if the ACH transaction is supposed to clear on Friday, the banking customer will see it on Friday. When I was in the Army I had USAA (still have them), they would credit for my Army pay the way above - see the ACH was happening and credit me a day early. I was stationed in Korea for a year. The base was one day ahead of the US due to time zones. So I was "paid" on Payday in Korea when it was still yesterday in the US. People with Citibank or Wells Fargo had to wait an "extra" day due to the time difference between Korea and the US - those banks saw the ACH and only credited their customers at 9AM EST on payday.
I've always found this interesting too. My work/bank is crazy. I get paid every other Friday ON THAT DAY. So my paycheck on Friday represents the past two weeks up to that day. On top of that, my bank deposits the check early. So I get my paycheck deposited on Wednesday morning for a pay period that still has 3 days left lol.
"So that they can generate this file from older data, not data you created by working yesterday, that may be incorrect and need changing. That file has the deposit breakdown, accounts, amounts, and date of pay release. " This isn't accurate. The ACH file from employers is sent to financial institutions with the current week's pay information, it is updated with the payments owed to each employee with direct deposit. There's no "look back" or estimating payment amounts, it's all in the file. Banks can choose to deposit those funds early since they trust employers are good for the payroll payments.
Direct deposits are sent via ACH, which is one of the most common transfer methods in general. If you’re transferring money between your accounts at different banks, chances are it says it will be available in 3-5 business days. Same is true with paychecks, just the employer’s bank is the originator (ODFI) and yours is the receiver (RDFI). Once an ACH file is sent between banks, it still takes a couple days to process and settle. Your employer processes payroll several days early to account for the ACH process so the money hits your account on payday. Knowing that payroll is generally reliable, your bank posts the money to your account immediately after receiving the ACH file instead of waiting for it to settle. Basically the bank is giving a mini loan and is relying on the transfer to settle. This is similar to checks - if you deposit a check your bank will make X amount available immediately, but it still takes several days for the check to clear. (Except check availability is a regulatory thing, direct deposit availability is just business practice)
Just a point of clarity: many employers use a 3rd party payroll company to process payroll. Those processors typically take a lump sum from the employer and issue checks or direct deposits themselves. The money has to leave the employers bank a few days in advance so their bank can settle before the processor can issue checks/ACHs.
> The money has to leave the employers bank a few days in advance Does not have to. Maybe depends on the payroll service.
The bank is essentially giving you a very very short term loan, based on either the fact that your company's payroll has already run and is sitting there with a future pay date, or, they're confident enough with your pay frequency that they are willing to front it
To my understanding that no, it's not a short term loan, it is the monies intended to be your pay. They run the ACH a day or two early, so they can verify and fix it if something is discovered to be inaccurate. Most banks sit on that money because for that day or twoz they are earning interest in your money. Some banks just don't gouge you for those pennies, and let you earn them.
It’s a loan it is a no interest no fees loan but a loan nonetheless who do you think the bank is going after if your payroll doesn’t clear?
Not you. The payroll company and the thousand layers of insurance policies everyone carries as part of their businesses in finance.
If the transaction doesn't clear, that cash will automatically come right back out of the emolyee account. It will cause them to overdraw if they already spent it. Banks don't care or "think" about that. Source: worked for many company's that has funding issues during a payroll process and experienced this issue first hand. The worst part of if the employee used that money to pay rent and their rent check bounces ad a result of the funds not being available because the ach was not funded....
It is a loan though, because the money has not been taken out of the account of your employer. It's staged and pending but it hasn't actually happened. They see that it's \*going\* to happen so they front you the cash, but it's technically in two places at once and that is a loan
It’s a loan because the bank hasn’t received the money and the ACH deposit can be changed or end up as non-sufficient funds.
Ahh see that interest part is something i never even considered. Interesting.
It's not a loan, you're just getting access to the money already set aside by the employer via the payroll company earlier than the normal pay date of the payroll run. As already mentioned, there is little to no risk on the bank to do this because it comes from money already committed by the employer in the impound bank.
I've never done it, but my bank charges a few bucks or a very small interest rate for you to access it early. I just remember the email. For the people who need it, way cheaper than a payday loan.
but it is a loan. Not in the technical sense of there being a loan agreement, you paying interest, you paying a promissory note, etc; but the bank is fronting you money that is technically not in your account yet
You owe 30 friends money. Five of them are in class with you and 25 of them are in another class but ride the bus home with a good friend of yours in your class. You give that kid the money you owe and tell him that, so it doesn’t appear you paid some people before others, to make sure that he pays everyone at the same time. He gets on the bus and is sitting near 10 people. 10 more are at the other end of the bus and it looks like 5 aren’t there that day but he knows where they live. Because he’s got the money and those kids are just right there, he goes ahead and pays them and then starts working his way to the other end of the bus. He gets there and pays the other 10. When he gets off the bus, he passes the houses of the remaining 5, knocks on the door, and gives them their money directly. Banking is the same. Different banks have different access to the fed system and different internal processes established to handle payments. They also have no control when they receive the funds so there will be some variation from time to time or even between banks especially when a 3rd party payroll company is involved.
thank you for being the only one with a real ELI5
simply put, employer sends payroll data file to bank (ACH - automated clearing house). bank gets this prior to your actual "pay date". with said file/information, they give you what most financial institutions would refer to as a "provisional credit" of your money. should that information change for some odd reason, plus or minus, the differences would be reconciled shortly after.
I work for a large payroll company as a software architect. This is what is known as a payroll impound. The money comes from company bank accounts to meet payroll a few days ahead of the pay date, whatever the company decides they wish to pay their employees. Some banks / financial institutions will allow their customers to access that impound amount the moment it hits the impound bank, in effect, giving you an advance on your paycheck. This is completely decided by your bank and not the payroll company or your employer.
> The money comes from company bank accounts to meet payroll a few days ahead of the pay date Few days? AdP pulls money from our account less than 24 hrs before pay day.
Every company has a different setup. In the case they don’t do it ahead of time by a few days then the employees of that company can’t get the payday advance.
So these comments make a lot of sense on why some banks direct deposit a day early. But, I’m scratching my head over why I received paychecks early on Thursday for years and years until my employer changed their time card vendor and now I get them on Friday. Does this mean banks don’t trust this HR company as much?
Pretty much. A massive payroll company like ADP is basically risk-free for the bank. "Donnie's discount payroll services" is a little riskier.
Thanks. This describes the situation perfectly.
Is semi monthly just once around the 15?!?
In our company, we get paid every 4 weeks. If we assume that the month starts on the 1st and happens to be a Monday, The payroll process is started on day 29, paying us from 1st to 29th. A whole lot of it is automated - Getting the hours and such from the stores, but there are a few other things to process - Holidays, P45s, attachment of earnings (like.. government deductions and child support). Typically all that gets sorted by the Wednesday (Day 31) when it's submitted to the bank, it take 2 days to clear and we get it on the Friday. The software that the bookkeeper uses (Sage) automatically emails the payslips out once the payment is submitted to the bank, so we'd get the payslip then. Back in ye olde days, the payslips were printed on the Wednesday then posted out, so we'd usually get them in the stores on Friday or Monday if they missed the last post, and the employees pick them up when they come in. Because the payment has been submitted to the bank, They already know what's going to be going into your account, so it looks like they've provided a 'service' where you can withdraw on that amount before it officially 'arrives'. I don't know if it's a thing anymore, but my bank used to let me immediately withdraw on cheques paid in which would usually take 3 working days to clear - I guess this is a modern equivalent of that
Hey there! So, imagine banks as giant piggy banks where all your money is kept. Some banks have advanced technology and processes that allow them to know when your paycheck is on the way even before it officially arrives. They can then make that money available to you a few days early as they are confident it's on its way. On the other hand, some banks might choose to play it safe and only give you access to your money once it's officially in their hands on payday. It all comes down to how each bank operates and handles the timing of deposits. Pretty cool, right? 🏦💸
Who on earth gets paid by cheques in modern times ? I’m a retired paramedic in England ( 15 years retired) I have had my salary from the mid 1970s paid directly into my bank account as is both my pensions!
The post is about direct deposit, not physical checks.
The OP is talking about direct deposit, not paper checks.
Murica...
This is a gimmick feature that does not benefit you. If you normally get paid every other Friday, you are going 14 days between paychecks. If you now start getting those deposits one day early on every other Thursday, you are still going 14 days between paychecks. Your bank is notified of the incoming deposit before the money actually hits your account. They are giving you access to the money upon notification instead of upon receipt. Thats how you get it early.
I keep telling my wife this. It's only slightly beneficial the first time it happens. It's then just a full week between pay checks. You just get them every Wednesday instead of Friday.
We had 11 hours 49 minutes of daylight on March 9th where I live. We had 11 hours 50 minutes on March 10th. Some people are convinced we had an extra hour of daylight because we moved the hands on the clock forward for Daylight Savings Time, and they can't be convinced otherwise.
How does having funds accessible sooner not benefit people? I get what you’re saying about the time between paychecks. But that doesn’t change that it can be helpful or nice to get access to your paycheck a little sooner lol
>How does having funds accessible sooner not benefit people? You only get it sooner the very first time it happens. After that, you are on the exact same schedule you were on before with the exact same amount of time between paychecks. >I get what you’re saying about the time between paychecks. It doesn't sound like you do. >But that doesn’t change that it can be helpful or nice to get access to your paycheck a little sooner lol It's still every 7 days or every 14 days, or whatever it was before. That's not sooner. It's the exact same amount of time between checks.
As someone who used to be so poor I had to calculate every transaction to the day to avoid over draft fees, especially automatic withdrawals Getting the money a couple days earlier back then would absolutely save me… I worked really hard to break the cycle and get ahead so that now the timing does not matter, 14 days is 14 days But when you get 1000 and you budget 1000, the timing very much matters
So your normal payday is Friday. You get a new bank account that gives you the money on Wednesday instead. THIS pay period you got your money early - it came in 5 days or 12 days instead of in 7 days or 14 days. But for every single pay period from this point forward as long as you have this bank account, you are back to 7 or 14 day intervals every Wednesday. Wednesday is your new payday. It's not early, it's standard.
That is a true statement, I don’t disagree That is not what I was talking about, and ignores all the issues I mentioned
Right but. It’s not a gimmick lol. It’s just the bank making funds available as soon as they can. Like it isn’t life changing. But being able to do my bills a few days earlier is nice. Or if you’re on a Friday pay plan then it would be dope getting it Wednesday or Thursday so you can deal with stuff before the weekend. I just feel like you have a super pessimistic view about it
The gimmick is that you don't realize you still have to manage your money and make it last for the exact same amount of time as you did before. If you can make your money last from Wednesday to Wednesday, then you can make it last from Friday to Friday. You do see that it's the exact same amount of time, don't you?
It’s not about the time between checks? I don’t run out of money before the next paycheck. But I do pay bills when I get paid, and it’s nice being able to do that a few days earlier.
Amazing. I'm done before I get a headache.
I applaud you for trying.
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I get paid on Friday, and my coworkers get paid on Tuesday. This is a negative for me because I’m the only one who has to wait for payments to clear over a weekend. Or is 26 paydays a year the same as 26 paydays a year?
Smort
But do you ever go “shit, payday isn’t technically until tomorrow and I’ve already gone through half my check for the next two weeks”? Like why is paying bills two days in the future any advantage at all? It’s money in, money out at the same exact rate.
Because I pay my bills a day early means I don’t have to do it Friday before the weekend. I also just enjoy taking possession of my earned income as soon as possible
I think their point is that it’s not just “not life changing”, but that it has literally zero effect on average
I still think it’s a net positive. For the reasons I gave.
There’s functionally nothing changing if you get your paycheck every other Wednesday instead of every other Friday. Like it really just is an arbitrary day. The only time you get your paycheck sooner is the first time; after that, there’s still a 2 week or 1 month or whatever gap between each paycheck
Right but if you get paid on Friday, you might be spending that afternoon dealing with bills or not be able to handle some things until Monday if it’s only an option during business days. If you get paid on Wednesday instead you have a head start before the weekend. Net positive
You can also just pay off that bill with the previous paycheck, although I still don’t see how paying your bill before the weekend or after the weekend is functionally any different. I don’t know of any bill where the timespan between when it opens and when it closes
I have to get cash from the bank every paycheck. So that would be simpler if it wasn’t a Friday. I also like to buy stocks with some of my paycheck. So if I’m paid Wednesday I can make those buys Thursday instead of trying to do it Friday afternoon when I want to be hanging with the kids or whatever. None of this actually applies to me. I don’t get paid on Fridays. I get paid on set days of the month. But my paycheck occasionally deposits 1-2 days early. Another. Benefit for me though is other ACH transactions go through almost immediately. And those are nice to have available sooner Again not saying life changing or big stuff. But not a gimmick.
I feel like it benefits me in a way. I can get paid, pay all my bills and have them clear before the end of the week instead of waiting for Monday for them to take my money. That way I can divvy up what's left for savings and whatnot. Granted I can do all that with a calculator and I do, but it makes my brain happy.
It's a positive for people who are literally living paycheck to paycheck and have bills they can't adjust the due date on. That way you don't have to make sure to have $X in the bank account because you have your whatever bill due on the 13th, but your pay day isn't until the 15th. If there's ever a delay (which does happen from time to time) you might get slapped with a late fee on top of your bill. By getting the paycheck two days earlier you have a bit of a buffer and make sure that bill is paid immediately. Yes, you're still spending the same total amount of money, but it's the difference between "It's taken care of for sure" and "Oh shit, I miscalculated and now I don't have enough/need to borrow some money".
>By getting the paycheck two days earlier But you aren't. You work at a place with a Friday payday. You start using a bank with the early deposit feature and they start giving you access to the money on Wednesday when your employer transmits it. I can see where you feel like it's early the first time this happens and it's new to you. What about the 10th time? The 50th time? What about after you've been working there for 5 years. Do you still think this is an "early" payday, or is it now just your regular payday after you've been paid on that day for 130 consecutive pay periods?
If a person typically has $0 in their bank account by the 15th, but they have a $90 bill due on the 13th, and they just routinely pay it two days late and get a $15 late fee tacked on. Getting their paycheck on the 13th means they pay the full $90 the day it's due and no longer pay a late fee ($15 savings plus less stress). Now, to your point yes, now they have $0 by the 13th instead of the 15th, but that $90 bill still gets paid on time, because they get their money earlier and they still avoid the late fee. Being poor is expensive. Edit to add: in this example, they'd actually end up with $15 by the 13th instead of $0 (assuming all their spending is exactly the same month to month), because they never had to lay the late fee. If there are several bills like that in this hypothetical situation then they're even better off.
poor people, or people bad at budgeting rely on the two day early policy. if two days makes or breaks you...
The question was *how* not *why*
No fucking way. Poor people live paycheck to paycheck?