Payroll processing turnaround

Each time you process a pay run, there will be a schedule by which the funds will be drafted from your account, then processed through ACH, before being deposited across employee bank accounts. This generally takes 2-4 business days. 

More about setting up direct deposit in OnPay→

What is ACH?

The term "ACH" stands for Automated Clearing House, which is a secure, nationwide network operated by Nacha (National Automated Clearing House Association), which banks and credit unions use to move money electronically in batches. It's commonly used for online transfers, bill payments, and direct deposits.

How is ACH different from a wire transfer?

According to Plaid, wire transfers are direct (and generally immediate) transfers between two financial institutions. ACH transfers, on the other hand, pass through the Automated Clearing House, and can take up to four (4) business days to complete. For the purposes of this article, this 2-4 day period is the payroll turnaround.

What's happening during the turnaround period?

In that table below, "Day 0" is the last day you can submit payroll before the check date. Your turnaround determines whether you can submit payroll up to two days before, or four days before the check date. Provided the pay run is approved and submitted before 11:30pm EST on Day 0, funds are drafted from your bank account on Day 1, then processed and deposited either the next day (for a 2-day turnaround), or on the fourth day (for 4-day turnaround). Note that this table does not account for weekends or bank holidays, which we'll cover later in this article.

*Must be a business day when banks are operating.

How is my company's payroll turnaround determined?

Once you've verified your bank account in OnPay, our Automated Clearing House (ACH) team will perform a risk assessment. This will determine your company's approval for direct deposit. If approved, we'll email you confirming your turnaround (2-4 days based on risk assessment). In some instances, you may be approved for Wire Only or Reverse Wire Only.

Do weekends affect payroll turnaround?

Yes. ACH transfers only process on business days. Weekends and bank holidays are not considered when determining ACH processing turnaround. For example, while Sunday is two days after Friday, if a payroll run is submitted on a Friday, with a two-day turnaround, the earliest check date you could set would be the following Tuesday.

Example: How weekends impact turnaround

In the calendar below, two companies have submitted payroll on a Thursday. One company has a 2-day turnaround, and the other, a 4-day turnaround. For payroll processed on a Thursday, with a 2-day turnaround, the earliest possible check date would be the following Monday. For a 4-day turnaround, the earliest check date would be the following Wednesday.

Do bank holidays affect payroll turnaround?

Yes. Just like weekends, ACH transfers do not process on federal bank holidays, and must be taken into consideration when processing payroll. Unlike weekends, these holidays are less predictable, so it's important to be aware of any upcoming bank holidays when processing payroll, to avoid paying employees late.

Example: How Bank holidays impact turnaround

Any federal bank holiday that falls on a day after the day you submit payroll, up to the expected deposit date, can add an extra day to your payroll turnaround. 

The table below presents four scenarios for a company with a 2-day payroll turnaround. In each row, the holiday falls on a different day, to show how the effective deposit date (check date) can be delayed by a federal bank holiday. 

The "Holiday is" column presents the scenario where the holiday falls on a specific day within the ACH process, as outlined in the first table in this article. The second column shows the "Impact" of the holiday in the scenario. The rest of the columns demonstrate the ACH process for the scenario, detailing any delays in each step of the process. Note that you can submit a payroll run (by 11:30pm EST) on the holiday, without impacting your turnaround.

Want to see how the next bank holiday might impact your pay schedule?

There are eleven federal bank holidays each year. Some of them are always on the same day of the week (Thanksgiving), and others are always on the same date (New Year's Day). With this, plus weekends to contend with, there's a lot to consider when planning your next pay run.

That's why, for every bank holiday, we have a dedicated help article where you can see if and how the holiday impacts your pay schedule, with adjusted submission deadlines to help you avoid paying workers late.

See all holiday pay run schedules→

Do I have to wait until the submission deadline to run payroll?

No. A payroll run can be submitted up to 31 days in advance of its check date. You can also approve and submit payroll for multiple payroll schedules concurrently, and process unlimited special (off-cycle) pay runs, allowing you to flexibly pay your team the way you want. Your OnPay subscription allows unlimited pay runs per month with no additional fees.

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