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  3. Tip Management
  4. Tip Payouts

Understanding Payouts: Money Movement and Payout Status

Updated

This article explains how tip payouts work within 7shifts, with a focus on the flow of funds and the differences between an employer's (Admin/Manager) view and an employee's experience. We'll cover:

  • The process of initiating and processing tip payouts.
  • How payout statuses are reflected in 7shifts reports.
  • Answers to frequently asked questions.

How Tip Payouts Work

When you initiate a tip payout batch in 7shifts, the following occurs:

  1. Fund Withdrawal: 7shifts attempts to withdraw the total batch amount from your 7shifts "float" (your account balance).
  2. Employer Status: 
    • Paid: If the withdrawal is successful, the batch is marked as "Paid" in your employer view. Each employee included in the batch will also show a "Paid" status. This means 7shifts has successfully processed the withdrawal per employee from your float.
    • Failed: If the withdrawal fails, the batch status is "Failed." Some employees may not receive their payouts. You can open the batch to see which payments failed and retry the withdrawal. If issues persist, contact 7shifts support.
  3. Employee-Side Processing: If the batch withdrawal is successful, the funds are then sent to each employee that was included in the batch.
  4. Employee Notifications: Employees receive notifications (push, SMS, and/or email) about their tip payouts. These notifications will clearly indicate whether:
    • Action Needed: The payout is pending because the employee needs to connect or update their bank account. The notification will provide the reason the payout failed and action required to receive the funds.
    • Funds Deposited: The payout was successful, and the funds have been deposited to the employee's connected bank account.

⚠️ Important Note: Employee-Side Processing

Even if you see a "Paid" status in your employer view, the actual deposit into an employee's bank account depends on their individual status, bank details, and processing times.

  • Employee Responsibility: Employees must ensure their bank details are accurate. Funds remain in a pending "wallet" state until their bank account is set up. 
  • Payout Failures: Employees are notified of failures and required actions. 
  • Automatic Retries: 7shifts automatically retries failed payouts once employees correct their bank details. No action is required from you if your payout dashboard shows "Paid." 
  • Invited Employees: If an employee is "Invited" and included in a payout, 7shifts will withdraw the funds and notify them to set up their bank account. The money remains pending until setup.
    • Note: For 'Automatically Synced' tip batches, you can use the toggle to exclude 'Invited' employees from your payout batches.

Failed Tip Payouts: FAQs

Q: Why does a report show a tip payout as "Paid" even if the employee hasn't received it yet?

  • 7shifts reports reflect the payout status from your perspective as the employer. When the funds are successfully withdrawn from your 7shifts float, the report shows "Paid." This means 7shifts has completed the transaction on your end. If there are issues depositing the funds into the employee bank account, it is on them to resolve the issue to receive their payout.

Q: How long does it take for employees to receive their tip payouts?

  • First-time Connection: For employees connecting their bank account for the first time or correcting an issue, it can take up to 5 business days for the payout to arrive after you initiate the batch. This allows for bank processing and settlement times.
  • Subsequent Payouts: Once an employee's bank account is successfully connected, future payouts should process almost instantly.

Q: What happens when an employee's tip payout fails due to incorrect bank details?

  • Pending Funds: The funds will remain pending. (Remember, if the funds were successfully withdrawn from your float, it will show as "Paid" on your end).
  • Automatic Retries: 7shifts will automatically retry the payout once the employee updates their bank information.

Q: What happens if an employee doesn't connect their bank account for a tip payout?

  • If an employee doesn't connect their bank account, their tips will remain in their 7shifts "wallet." They must connect a debit account to receive these funds. If they refuse to connect their account, please contact 7shifts Support. We will assist you in returning the funds to your 7shifts float.

Q: How do I avoid paying an employee's tips twice if I've already included them in payroll and they later connect their bank account?

  • 7shifts currently does not prevent double payments in this scenario and cannot reverse the funds as the funds have already been deposited into the employees bank account. If you pay tips through payroll, you are responsible for ensuring those tips are not also paid through 7shifts tip payouts. If a double payment occurs, you are responsible for recovering the overpayment from the employee, either through direct repayment or by adjusting future tip payouts or pay checks.
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