How to Resolve a Bank Error on Payroll

Bank errors on payroll may occur for several reasons. The most common reason for a bank error on payroll is due to not-sufficient funds (NSF) in the company bank account. 

Note: As of April 22, 2025, Homebase Payroll now offers 3-day payroll processing instead of 4-day processing. Any bank error-related processing downgrades that occurred before April 22 will result in a move to 4-day processing, while those on or after April 22 will move to 3-day processing.

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What happens when there's a bank error on payroll? 

Homebase will send an email, a push notification, a text message to the payroll admins on the account notifying them of the following: 

• Payroll will be blocked and all other payrolls processing will be placed on hold until the bank error is resolved. 
• A red banner will appear in the account indicating the bank error and the "Start Payroll" button will be greyed out
• Customers on 2 Day Processing will be downgraded to 3 Day Processing.
  • Note: Once the account exhibits sufficient strong banking history with Homebase Payroll again, it may be eligible for upgrade back to 2 Day Processing. Customers with two or more bank errors on payroll will remain on 3 Day processing permanently.
• A fee of $125 will be drawn from the company bank account. 

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Resolve a bank error on payroll: 

Customers have two options to resolve most bank errors. 

Option 1: Resolve by wire transfer (recommended): 

1. Login to your Homebase account
2. Click Resolve in the red banner at the top of the screen, or in the red box on Pay > Payroll Click Resolve in the red banner at the top of the screen, or in the red box on the Payroll tab 
3. Select Wire Funds
     
4. Click Continue
5. Homebase will display the wire details to provide to your bank. 
   • If you need to access the wire instructions after leaving this screen, you can click "Resolution Pending" in the red banner to view them again.
      
6. The red banner in your account will update to read "Resolution Pending" indicating we're awaiting your wire transfer.
   
7. Contact, or visit your bank to initiate a wire transfer in accordance with the instructions provided
   • Ensure your bank sends a wire transfer - other funding types will not be received timely and will delay your account being placed back in good standing with Homebase
8. Homebase will send an automated email notifying you that your wire has been received. At that time, your account will be able to run payroll again and any processing payrolls will move forward. 
   • For stopped payments due to a bank error, employees will receive payment the business day following the receipt of your wire transfer. To send this receipt to our team, please contact support.

Option 2: Resolve by ACH re-debit (takes 3-5 business days to complete):

Note: If you select this method you won't be able to start a new payroll until the ACH finishes processing, which takes up to 3 to 5 business days. 

1. Login to your Homebase account
2. Click Resolve in the red banner at the top of the screen, or in the red box on the Payroll tab 

1. Select Re-attempt withdrawal, 

   See below for additional details: 🆕 New: Choose a Bank Account for the Re-debit

     
2. Click Continue
3. Homebase will display the message below indicating the date this re-attempt was initiated.
   
4. The red banner in your account will update to read "Resolution Pending" indicating this re-attempt is in progress.
   
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5. If the debit is successful, 3 - 5 business days after you initiate a re-attempt, your account will automatically be cleared. You'll receive an email notification alerting you to your account being placed back into good standing. 
   • Example: If you click to re-attempt a withdrawal from the company bank account on Monday, your account will be cleared and placed back in good standing by Thursday afternoon - a total of 4 business days.

🆕 New: Choose a Bank Account for the Re-debit

If your business has multiple active bank accounts connected to Homebase Payroll, you can now choose which bank account you’d like to use for this re-debit attempt.

When you select Re-attempt Withdrawal, you’ll see a screen allowing you to pick from your available verified bank accounts before confirming the retry.

This improvement helps reduce repeat NSF issues by giving you full visibility and control over which account will fund the retry.

Note: You can only select from bank accounts that are already verified and active in your Homebase Payroll settings. To add a new bank account, visit your Payroll Settings page before re-attempting the withdrawal.

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What happens if my attempt to resolve a bank error fails? 

Once your first attempt (either wire or re-attempted withdrawal) fails, the following will happen: 

• You'll receive an email, a push notification, a text message notifying you of the failure. 
• Your payroll will remain blocked and Homebase will not file or pay any payroll taxes on your behalf until the bank error is resolved. 
• The red banner in your account will update to say "contact us."
  • Upon contacting us, you'll be able to choose the same options as before: 
    • ACH re-attempt withdrawal
    • Wire funds
      • Note: Employee bank account and other sensitive information cannot be accessed in your account or by Homebase Support.

We ask that you contact our support team to ensure you have a full understanding of the status of your account & the required actions from you to resolve the outstanding issue.  

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Consequences and impacts of payroll bank errors: 

Failure to fund a payroll successfully can lead to several downstream issues for your Homebase Payroll service. 

What Happens	Details
Blocked payroll until the bank error is resolved.	Until the bank error is resolved, using the options above, your account will be blocked from processing payroll, and no payroll tax filings or payments will be sent on your behalf.
Downgrade to 3 Day Payroll processing.	If your account previously ran payroll on 2 Day or Next Day processing speeds, you'll be downgraded to 3 Day processing speed. For example, you'll need to run payroll by Tuesday at 1PM CST for a Friday payday.
Insufficient Funds on Payroll Fee of $125.	Homebase charges a fee of $125 per NSF bank error. This fee is charged as soon as an NSF occurs on the account.  Example: An NSF occurs on Friday morning, you will be charged $125.00 on the same morning it occurred.
Blocked Debits for Business Bank Accounts	Some business bank accounts have "debit blocks" on them for security purposes. In this case, specific authorization is required before any funds can be debited. To avoid failed fundings (and delays to payroll), companies should whitelist both of the following ACH company IDs: 1209306000 942875288L
Account termination after 5 payroll funding errors.	Customer accounts will be moved into a termination queue after 5 failed payroll fundings. Homebase will not file or remit any payroll taxes for the account, and any unpaid payroll taxes will be refunded to the company bank account. Termination due to payroll funding failures are final and cannot be disputed to reinstate the account. Homebase reserves the right to suspend service at any time, but the automatic termination process will begin after excessive failures.
Account termination due to 50+ days without bank error resolution.	If your account remains blocked due to funding failures for greater than 50 days without resolution, Homebase will begin termination proceedings. You'll be notified via email of this account termination. Homebase will not file or remit any payroll taxes for the account, and any unpaid payroll taxes will be refunded to the company bank account. Termination due to unresolved payroll bank errors are final and cannot be disputed to reinstate the account. Homebase reserves the right to suspend service at any time, but the automatic termination process will after an extended period of no resolution for a payroll funding failure.