Technology Banking
growth | 4 minute read

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.”

With Same Day ACH, Netflix can now pay an domestic transaction under $25,000 with an electronic transaction that settles within hours

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.”

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The information in this report is for educational purposes only and should not be used or construed as financial advice or a recommendation to participate any strategy mentioned herein. Wells Fargo does not guarantee that the information supplied is complete, undertake to advise you of any change in its opinion, or make any guarantees of future results obtained from its use. The concepts discussed in the paper require the assistance of qualified legal counsel and tax advisors, and investors should consult their own attorneys and tax advisors with respect to their own situations.

  1. Silicon Valley Top 150 2017 Silicon Valley Top 150 Public Technology Companies Rankings by Annual Revenue

Disclosures

Securities Products:

Not Insured by FDIC or any Federal Government Agency

May Lose Value

Not a Deposit of or Guaranteed by a Bank or Any Bank Affiliate

© 2019 Wells Fargo Bank, N.A. All rights reserved. Deposit products offered by Wells Fargo Bank, N.A. Member FDIC. Deposits held in non-U.S. branches are not FDIC insured.

Wells Fargo Securities is the trade name for the capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including but not limited to Wells Fargo Securities, LLC, a member of NYSE, FINRA, NFA and SIPC, Wells Fargo Prime Services, LLC, a member of FINRA, NFA and SIPC, and Wells Fargo Bank, N.A. Wells Fargo Securities, LLC and Wells Fargo Prime Services, LLC are distinct entities from affiliated banks and thrifts.

© 2019 Wells Fargo Asset Management (WFAM) is a trade name used by the asset management businesses of Wells Fargo & Company. Wells Fargo Funds Management, LLC, a wholly owned subsidiary of Wells Fargo & Company, provides investment advisory and administrative services for Wells Fargo Managed Account Services and Wells Fargo Funds. Other affiliates of Wells Fargo & Company provide subadvisory and other services for the funds. The funds are distributed by Wells Fargo Funds Distributor, LLC, Member FINRA, an affiliate of Wells Fargo & Company. Neither Wells Fargo Funds Distributor nor Wells Fargo Funds Management holds fund shareholder accounts or assets. This material is for general informational and educational purposes only and is NOT intended to provide investment advice or a recommendation of any kind—including a recommendation for any specific investment, strategy, or plan.

© 2019 Wells Fargo Capital Finance. All rights reserved. Products and services require credit approval. Wells Fargo Capital Finance is the trade name for certain asset-based lending services, senior secured lending services, accounts receivable and purchase order finance services, and channel finance services of Wells Fargo & Company and its subsidiaries.

Wells Fargo & Company conducts business outside the U.S. through various companies, including duly authorized and regulated subsidiaries and affiliates in Asia, Canada, and Latin America. In Europe, banking services are provided through Wells Fargo Bank International (WFBI), directly regulated by the Central Bank of Ireland, and Wells Fargo Bank, N.A. London Branch, authorized by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and the PRA. All products and services may not be available in all countries. Each situation needs to be evaluated individually and is subject to local regulatory requirements.

We provide links to external websites for convenience. Wells Fargo does not endorse and is not responsible for their content, links, privacy or securities policies.

Important notice regarding use of cookies: By continuing to use this site, you agree to our use of cookies as described in our Digital Privacy and Cookies Policy.

The opinions expressed in this document are general in nature and not intended to provide specific advice or recommendations for any individual or association. Contact your banker, attorney, accountant or tax advisor with regard to your individual situation. The opinions of the author do not necessarily reflect those of Wells Fargo Capital Finance or any other Wells Fargo entity.

The information in this report is for educational purposes only and should not be used or construed as financial advice or a recommendation to participate any strategy mentioned herein. Wells Fargo does not guarantee that the information supplied is complete, undertake to advise you of any change in its opinion, or make any guarantees of future results obtained from its use. The concepts discussed in the paper require the assistance of qualified legal counsel and tax advisors, and investors should consult their own attorneys and tax advisors with respect to their own situations.

  1. 2017 Silicon Valley Top 150 Public Technology Companies Rankings by Annual Revenue.