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We live in a technology-centric world.

So much so that it’s easy to become dependent. People are always connected. Instant feedback is expected. Financial transactions are easily processed and tracked online.

But what happens when that ability is lost?

Syndeo and thousands of other businesses across the country that process payroll for their clients’ employees had the nightmare of that very scenario playing out after being hit with an unexpected vendor notification on Oct. 23.

Members of Syndeo’s leadership team received emails after normal business hours informing us that Cachet Financial Services, our automated clearing house processor, would no longer be processing any of our ACH payments, effective immediately.

Cachet’s bank decided not to honor direct deposits from Cachet until all invoices had settled, which delayed direct deposits for up to 48 hours. That occurred after Syndeo had already submitted all payroll files for the entire week.

Suddenly hundreds of employees from dozens of businesses were at risk of not being paid on time.

What followed is why we believe our customer service is second to none and also a case study in crisis management.

“I am extremely proud of my team members for their efforts during this troubling time,” says Bill Maness, Syndeo’s CEO. “Their collective contributions ensured that all employees received their paychecks on payday.”

After receiving Cachet’s notification, members of our team began working diligently to find alternate methods to ensure all of our clients’ employees were paid as scheduled on Oct. 24.

The abrupt change forced Syndeo to manually process every payroll, including getting wires from clients, cutting paper checks and having members of our team hand deliver them to clients.

“While this is obviously not what any of us wanted to do, it is our duty and obligation to get all of our client’s employees paid on time, and this was the only way to accomplish that,” Maness says.

We also had to account for dozens more payrolls that were scheduled for Oct. 25.  Fortunately, our local banking partner Fidelity Bank stepped up as an emergency backstop to ensure the Oct. 25 payrolls were completed via direct deposit.

“Our partners at Fidelity Bank, led by Treasury Services Manager Keith Moyer, saved the day for us,” Maness says.

More fallout
And just when we thought the dust had begun to settle, we were dealt another blow.

We discovered on Oct. 28 Cachet’s bank processed the previous week’s payrolls, despite saying it would not. That resulted in double payments to some of our clients’ employees. Clients affected by those double payments were contacted individually with strategies on ways for payment reversals.

However, we are using all of this as an opportunity to re-evaluate our internal processes to ensure our crisis-response plan is ironclad.

We no longer will be using Cachet to process our ACH payments. Instead, we are transitioning to another third-party transaction agent to process ACH payments moving forward. Over the next several weeks, we will be processing our payrolls with Fidelity Bank until we can complete the transition to another ACH clearinghouse.

Cachet’s troubles originated when the company discovered in September it was a victim of fraud.  A company in New York called MyPayrollHR is alleged to have fraudulently diverted over $35 million of its client’s money to private accounts. MyPayrollHR also utilized Cachet Financial Services and stuck Cachet with $26 million in losses.

Meanwhile, as we transition to a new partner for ACH transactions, know that we will do whatever it takes to meet payroll deadlines going forward, up to and including manual processing and check delivery, to be certain the employees of our clients are paid correctly and on time. Every time.

About us: As the Heartland’s leading employer services company, Syndeo partners with local business owners to help them minimize risk, improve efficiency and maximize profitability allowing them the freedom to focus on growth and fulfilling their mission. Syndeo fulfills its mission by taking on all of the HR responsibilities for our clients’ workforce, including employee relations, benefits, risk management and payroll.

 

~Josh Heck, Marketing Manager Syndeo