Can my truck driver have a direct deposit go into someone else’s account?
Every so often you’ll get an employee that asks the payroll department for a new direct deposit form so they can put some money into someone else’s account. It may be a spouse or significant other, it also may be someone to whom they owe money. It may be tempting to allow it, it doesn’t affect you after all right? Wrong. It could mean big losses for your trucking company. Let’s talk about what could go wrong.
You wouldn't be able to reverse the direct deposit if necessary.
Sometimes, you accidentally pay the wrong person the wrong amount. Say you wanted to pay Joe P. Jones and you paid Joe B. Jones. Joe B. Jones hasn’t worked for you in years but you were in a hurry and mistakes do happen. At that point, you may need to reverse the incorrect direct deposit. And if you were diligent and had all forms properly signed, your company’s direct deposit form should allow for reversal in the case of an error like this.
Here is the catch. If Joe B. Jones, who was paid in error, has an account that he is not listed on, then he can’t authorize the reversal as he has no authority to have funds removed from the account. So now you are taking funds that are not authorized. That’s a no-no. The account holder can get you in trouble for that. If you are fortunate, you will just lose that money. Your bank may impose other fees or could even not let you send money via ACH anymore. It’s just not worth the risk.
How do you prevent this?
What you need to prevent this is evidence that the employee is on the account to which they want to deposit. This can be a copy of a check with their name on it. (This check is also nice to verify account numbers, some people have poor penmanship.) It can also be a letter from the bank or credit union. If you require this document, you can lose any worries about a failed reversal from another account.
Written by Mike Ritzema
With over 20 years of experience in entrepreneurship, management, business planning, financial analysis, software engineering, operations, and decision analysis, Mike has the breadth and depth of experience needed to quickly understand entrepreneurs’ businesses and craft the most suitable solutions.
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