Customer Funds

12 Months Ended

Dec. 31, 2023

Investments, Debt and Equity Securities [Abstract]

Customer Funds

4. Customer Funds

Overview

In certain jurisdictions, we collect funds for payment of payroll and taxes; temporarily hold such funds until payment is due; remit the funds to the customers’ employees and appropriate taxing authorities; file federal, state, and local tax returns; and handle related regulatory correspondence and amendments. The customer assets are held in segregated accounts intended for the specific purpose of satisfying client funding obligations and therefore are not freely available for our general business use. In the U.S. and Canada, these customer funds are held in trusts.

Our customer funds are held and invested with the primary objectives being to protect the principal balance and to ensure adequate liquidity to meet cash flow requirements. Accordingly, we maintain on average approximately 45% to 55% of customer funds in liquidity portfolios with maturities ranging from one to 120 days, consisting of high-quality bank deposits, money market mutual funds, commercial paper, or collateralized short-term investments; and we maintain on average approximately 45% to 55% of customer funds in fixed income portfolios with maturities ranging from 120 days to 10 years, consisting of U.S. Treasury and agency securities, Canada government and provincial securities, as well as highly rated asset-backed, mortgage-backed, municipal, corporate, and bank securities. To maintain sufficient liquidity to meet payment obligations, we also have financing arrangements and may pledge fixed income securities for short-term financing.

Financial Statement Presentation

Investment income from invested customer funds, also referred to as float revenue or float, is a component of our compensation for providing services under agreements with our customers. Investment income from invested customer funds included in revenue amounted to $168.7 million, $80.2 million, and $41.1 million for the years ended December 31, 2023, 2022, and 2021, respectively. Investment income includes interest income, realized gains and losses from sales of customer funds’ investments, and unrealized credit losses determined to be unrecoverable.

The amortized cost of customer funds as of December 31, 2023, and 2022, is the original cost of assets acquired. The amortized cost and fair values of investments of customer funds available for sale were as follows:

	December 31, 2023
	Amortized		Gross Unrealized					Fair
	Cost		Gain		Loss			Value
	(In millions)
Money market securities, investments carried at cost    and other cash equivalents	$	2,800.7	$	—	$	—		$	2,800.7
Available for sale investments:
U.S. government and agency securities		768.3		2.3		(35.1	)		735.5
Canadian and provincial government securities		448.7		1.3		(11.3	)		438.7
Corporate debt securities		664.7		2.6		(19.4	)		647.9
Asset-backed securities		208.9		1.0		(3.3	)		206.6
Mortgage-backed securities		60.3		0.8		(0.7	)		60.4
Other short-term investments		16.1		—		—			16.1
Other securities		76.2		0.1		(3.2	)		73.1
Total available for sale investments		2,243.2		8.1		(73.0	)		2,178.3
Invested customer funds		5,043.9	$	8.1	$	(73.0	)		4,979.0
Receivables		49.6							49.6
Total customer funds	$	5,093.5						$	5,028.6

	December 31, 2022
	Amortized		Gross Unrealized					Fair
	Cost		Gain		Loss			Value
	(In millions)
Money market securities, investments carried at cost    and other cash equivalents	$	2,698.7	$	—	$	—		$	2,698.7
Available for sale investments:
U.S. government and agency securities		721.3		—		(53.1	)		668.2
Canadian and provincial government securities		438.7		0.1		(17.8	)		421.0
Corporate debt securities		653.8		0.5		(35.5	)		618.8
Asset-backed securities		169.6		0.1		(6.1	)		163.6
Mortgage-backed securities		14.5		—		(0.7	)		13.8
Other short-term investments		57.0		—		—			57.0
Other securities		74.4		—		(5.9	)		68.6
Total available for sale investments		2,129.3		0.7		(119.1	)		2,011.0
Invested customer funds		4,828.0	$	0.7	$	(119.1	)		4,709.7
Receivables		20.0							19.8
Total customer funds	$	4,848.0						$	4,729.5

The following represents the gross unrealized losses and the related fair value of the investments of customer funds available for sale, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.

	December 31, 2023
	Less than 12 months					12 months or more					Total
	Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value
	(In millions)
U.S. government and agency securities	$	(0.5	)	$	38.5	$	(34.6	)	$	508.3	$	(35.1	)	$	546.8
Canadian and provincial government securities		(0.7	)		101.8		(10.6	)		234.8		(11.3	)		336.6
Corporate debt securities		(0.2	)		36.6		(19.2	)		465.7		(19.4	)		502.3
Asset-backed securities		(0.2	)		39.2		(3.1	)		101.5		(3.3	)		140.7
Mortgage-backed securities		(0.1	)		3.9		(0.6	)		11.6		(0.7	)		15.5
Other securities		—			1.9		(3.2	)		67.1		(3.2	)		69.0
Total available for sale investments	$	(1.7	)	$	221.9	$	(71.3	)	$	1,389.0	$	(73.0	)	$	1,610.9

Management does not believe that any individual unrealized loss was unrecoverable as of December 31, 2023. The unrealized losses are primarily attributable to changes in interest rates and not to credit deterioration. We currently do not intend to sell or expect to be required to sell the securities before the time required to recover the amortized cost.

The amortized cost and fair value of investment securities available for sale at December 31, 2023, by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or to prepay obligations with or without call or prepayment penalties.

	December 31, 2023
	Cost		Fair Value
	(In millions)
Due in one year or less	$	3,100.7	$	3,095.8
Due in one to three years		951.1		909.5
Due in three to five years		793.4		775.7
Due after five years		198.7		198.0
Invested customer funds	$	5,043.9	$	4,979.0