Pay an employee with direct deposit

Register for direct deposit and add an employee's bank account, so you can pay electronically when running payroll.

How it works

Direct deposit lets you pay employees electronically. It can take a few days to pay an employee with direct deposit, so you'll need to run payroll five business banking days before your pay date. The funds will be withdrawn from your originating bank account up to four business days before the pay date.

The cutoff is 12-noon Pacific Standard Time (PST) on payment day. For example, if you process the pay run at 11am PST on Monday, it should show in your employees' bank accounts on Friday. If you process the pay at 1pm PST on Monday, it should go into your employees' accounts on Monday the following week.

If a holiday comes between the payment day and the day you want the funds in your employees' accounts, you'll need to process the pay run one business banking day earlier to cover it.

If you don't meet the five business day lead time, we'll ask you to change your pay date or change the payment method to make sure you pay employees on time.

Before you start

Make sure you:

Choose to pay with direct deposit

  1. In the Payroll menu, select Employees.
  2. Click the employee's name to open their details.
  3. Click the Payment Method tab.
  4. Select Direct deposit as their payment method.
  5. Enter an employee’s bank account details.

    Xero allows direct deposits to standard checking accounts, savings accounts and some money market checking accounts.

    You can add up to four US bank accounts by clicking Add Another Bank Account.

  6. Click Save.

Once you finish setting up direct deposit for your employees, run a pay run to pay them electronically.