2-Day vs 4-Day

Today, Gusto Embedded supports 2-day payroll and the standard 4-day. With 2-day payments, you can process payroll up to two business days in advance of the check date.

2-day payroll timeline example:

• Wednesday: Run payroll by 4pm PT.
• Wednesday: Funds debited from the company's bank account. Funds are processing.
• Friday: Funds are deposited in an employee's bank account(s) if paid via direct deposit, usually in the morning.

With 4-day payroll, you have to process payments four business days in advance of the check date:

• Monday: Run payroll by 4pm PT. Funds debited from the company's bank account. Funds are processing.
• Tuesday–Thursday: Funds are processing. Company debit is successful or unsuccessful by Thursday.
• Friday: If Company debit was successful, funds are deposited in an employee's bank account(s) if paid via direct deposit, usually in the morning.

Embedded Processing Timelines

When a new Partner Managed Companyis created, it will be created with a 2-day ACH processing speed by default (for employees only, all contractor payments remain on 4-day ACH).

This means:

• Gusto is initiating the transfer of funds from Gusto to the employee before we have confirmed a cleared debit from the company bank account
• Should a payroll debit fail on a 2 day processing speed, the company will go into collections until Gusto has received the funds for the failed debit. If this collection is not fulfilled by the company, the liability is transferred to you (after 90 days)
• You can set an aggregated threshold where a payroll would be pushed from 2 day to 4 day.
  • Aggregated meaning within 24 hours the sum of all payrolls can not exceed that threshold to remain on 2 day
  • If a payroll was on 2 day and moved to 4 day as a result of a payment threshold being hit the user must cancel the payroll and you must adjust the threshold and re-process the payroll

Should you decide that you want to default to 4-day ACH for all new customers and mitigate the risk for 2 day errors or collections, please contact your Implementation Team.

2 day vs 4 day

Customer profiles and risk tolerance varies across businesses and industries. Gusto Embedded supports both 2-day and 4-day ACH to provide our Partners with the flexibility to offer the best solutions to their end users.

Suggestions to consider for your Payroll product’s processing speed:

• Provide a guided in-app experience on payment speed to your end users to help educate them on the implications and tradeoffs.
• Encourage Users to setup using Plaid
  • Plaid provides insight to an instant bank balance, leverage that endpoint to review and adjust thresholds, this is a key piece in the Gusto evaluation process
    Incorporate 2 day limits using the fast_payment_limit feature. As an Embedded Partner, once you are on the hook for the funds you should evaluate and decide the level of risk you would like to take on in a 24 hour period for a given client.

If using the fast_payment_limit threshold for 2-day, allow for users to request temporary or permanent increases through communication with their support team.

When a company is Onboarded we will default to a 2-day ACH timeline (for employees only).

• Should you decide that you want to default to 4 day ACH and mitigate the risk for 2 day errors or collections, contact us.

Recommendations

Our recommendations around processing timelines & thresholds:

• Provide a guided in-app experience on payment speed to your end users to help educate them on the implications and tradeoffs.
• Encourage Users to setup using Plaid - Plaid provides insight to an instant bank balance, leverage that endpoint to review and adjust thresholds, this is a key piece in the Gusto evaluation process
• Incorporate 2 day limits using the fast_payment_limit feature. As an Embedded Partner, once you are responsible for the funds. You should evaluate and decide the level of risk you would like to take on in a 24 hour period for a given client.
• Review Pay Schedules - more frequent pay schedules mean lower payroll amounts, incorporate this information into your 2 day configuration

Update a Company's Processing Configuration

You can update a company's payroll processing using the PUT companies/{company_uuid}/payment_configs endpoint.

curl --request PUT \
     --url https://api.gusto-demo.com/v1/companies/{company_uuid}/payment_configs \
     --header 'accept: application/json' \
     --header 'authorization: Bearer <<COMPANY_API_TOKEN>>' \
     --header 'content-type: application/json' \
     --data '
{
     "fast_payment_limit": 5000,
     "payment_speed": "4-day"
}
'

const fetch = require('node-fetch');

const url = 'https://api.gusto-demo.com/v1/companies/{company_uuid}/payment_configs';
const options = {
  method: 'PUT',
  headers: {
    accept: 'application/json',
    'content-type': 'application/json',
    authorization: 'Bearer <<COMPANY_API_TOKEN>>'
  },
  body: JSON.stringify({fast_payment_limit: 5000, payment_speed: '4-day'})
};

fetch(url, options)
  .then(res => res.json())
  .then(json => console.log(json))
  .catch(err => console.error('error:' + err));