Cachet Financial- When New York-based cloud payroll provider MyPayrollHR unexpectedly shuttered its doors last month and disappeared with $26 million worth of customer payroll deposits, its payment processor Cachet Financial Services ended up funding the bank accounts of MyPayrollHR client company employees anyway, graciously eating a $26 million loss which it is now suing to recover.
But on Oct. 23 — less than 24 hours before another weekly payroll rush — Pasadena, Calif.-based Cachet threw much of its customer base into disarray when it said its bank was no longer willing to risk another MyPayrollHR debacle, and that customers would need to wire payroll deposits instead of relying on the usual method of automated clearinghouse (ACH) payments (essentially bank-to-bank checks).
Cachet processes some $150 billion in payroll payments annually for more than 110,000 employers. But payroll experts say this week’s actions by Cachet’s bank may well soon put the 22-year-old company out of business.
“We apologize for the inconvenience of this message,” reads the communication from Cachet that went out to customers just after 6:30 PM ET on Oct. 23. It continued:
“Due to ongoing fraud protocol with our bank, they are requiring pre-funding via Direct Wire for all batches that were uploaded this week, unless employees were already paid or tax payments were already transmitted. This includes all batch files moving forward.”
All files that were uploaded today for collection and disbursement will not be processed. In order to process disbursement, we will need to receive a wire first thing tomorrow in order to release the disbursements.
All collections that were processed prior to today will be reviewed by the bank and disbursements will be released once the funds are cleared. Credit trans
Deadline for wires is 1 P.M. PST.
This will be the process until further notice. If you need a backup processor, please contact us.
If you require wire instructions, please respond to this email and they will be sent to you.