Same Day ACH helps Netflix strengthen relationships
Discover how Same Day ACH allows Netflix to connect more seamlessly with employees and vendors alike.
Since 1997, Netflix has been a leader in digital content. It tallies more than 100 million members around the world, who watch 125 million hours of programming each day. In 2013, it added original productions to its entertainment options.
For the 14-member accounts payable team, headquartered in Los Gatos, California, it was this switch to original programming that introduced new challenges — and new payment opportunities.
“With original productions, we now have a more creative initiative,” explained Lily Olalia, accounts payable supervisor. “That type of business runs on just-in-time funding. We have to be flexible and able to support those needs.”
Same Day ACH provides immediate payment for creative projects
The launch of Same Day ACH credits in September 2016 provided the perfect solution for Netflix. The company adopted Same Day ACH immediately and now uses the payment method for creative projects and content providers, such as photo shoots, hair stylists, and makeup artists, as well as out-of-pocket reimbursements for employees.
They currently process more than 650 Same Day ACH transactions each month, with an average size of about $6,200. Their volume includes payments from across the parent company, its studios, and streaming division.
Same Day ACH brings value to Netflix’s suppliers, its employees, and the accounts payable department. It dovetails with the company’s values as an early adopter of technology and an organization focused on seamless experiences.
“What makes Netflix a unique place is that as employees, we’re given the responsibility to seek out what’s best for Netflix as a whole,” Olalia said. “We’re called on to innovate and think of alternatives. How can we make the business flow a little bit smoother, easier?”
Suppliers focus on creative projects — not payment status
Same Day ACH evolved from the needs of the business for rush payments. With original productions, the company worked with studios large and small, in a variety of locations. Most projects required an upfront deposit. Smaller studios in particular took a “fund as you go” approach that made immediate payment a necessity.
“We work with independent studios, up-and-coming producers,” Olalia explained. “They’re much smaller scale than the Disneys and Warners of the world — but we still commit to a timely payment consideration. Same Day ACH makes the relationship between the supplier and the business seamless. It’s never an issue of ‘Will I make my payroll?’ because they know they’ll get funded.”
For accounts payable, traditional processes — such as requesting a purchase order, processing an invoice, or cutting a check — could not meet the aggressive timelines required. They struggled to find the right payment method. Wire transfers and commercial cards provided fast turnaround, but suppliers disliked the fees involved. Checks cost less but took approximately seven days to process, print, and mail, due to outsourcing.
With Same Day ACH, Netflix can now pay any domestic transaction under $25,000 with an electronic transaction that settles within hours. Suppliers embraced it right away. For accounts payable, faster payment decreased supplier inquiries about payment status.
“Same Day ACH makes our suppliers willing — and wanting — to work with us,” Olalia stated. “It allows them to be more creative and focused. It makes the business relationship more trustworthy.”
Employees appreciate faster reimbursement
Netflix also rolled out Same Day ACH for employee reimbursements. Olalia worked with the payroll department to develop a process. Because the company already paid most employees with ACH direct deposit, there was no need to collect additional bank account information, making implementation fast and simple.
“Payroll is really excited and happy with Same Day ACH,” Olalia noted. “If an employee turns in their expense report on Wednesday, they can get reimbursed the next day.”
Same Day ACH incents employees to submit more timely expense reports. This streamlines accounting and improves accuracy, because out-of-pocket expenditures are recorded in the correct time period. Before, reimbursements typically occurred during bi-weekly pay periods, which required adjusting many transactions manually.
The company processes a sizable volume of reimbursements, due to the autonomous nature of the company culture.
As Olalia explained, “We’re granted the freedom to incur any costs associated with our business, with correct justification. For instance, if I need to buy a new cord for my computer, or if an employee is on-site with a production and needs a camera or whatnot, they can just buy it right away with a credit card and get reimbursed. There’s no need to submit to procurement and have purchasing buy it.”
Faster payment provides lasting value
From a technology perspective, implementation could not have been easier. Olalia’s team originates Same Day ACH directly from their ERP system, with a simple change to the effective date for the transaction.
To collect and manage supplier payment information, including bank account and routing numbers, Olalia relies on a dedicated three-person supplier onboarding team that’s part of their accounts payable department. Netflix also created a proprietary app that lets suppliers securely sign up for electronic payments. Both ensure they capture correct information and avoid fraud.
In the end, the biggest advantage of Same Day ACH has been stronger relationships.
“It’s all about building the relationship — not about the cost for a wire or an EFT,” Olalia concluded. “It’s about what the suppliers desire, what makes the relationship and process easier for them, and the experience more seamless.”