by Travis Ward, Payroll Experts, Inc.
We live in an ever increasing paperless society. However, many employees are still beholden to receiving a paper check for payroll. The American Payroll Association and the Electronic Payments Association have done many studies and written many articles on the benefits of direct deposit. In this month’s article, I will be talking about the benefits of direct deposit and will reference the studies/suggestions from the American Payroll Association.
By encouraging employees to utilize direct deposit, employers can realize a cost savings in several different ways. First, employers will save time when they don’t have to distribute “live” paychecks. As part of Payroll Experts Paperless Payroll Services we can email secure pay stubs directly to your employees. This will save your company the headache of distributing pay checks or direct deposit vouchers. Direct deposits also save your employees time because now they aren’t taking longer lunches or leaving work early to try and run to the bank and get their checks deposited. Studies show that employees use 8.5 to 24 hours per year of company time depositing paper checks. This costs the company money and drains productivity. Another benefit of Direct Deposit is that it simplifies your account reconciliation. Direct Deposits are withdrawn from your account as one lump sum and so all you would have to clear is one withdrawal instead of searching for each individual check. Again, this will give employees more time to be more productive elsewhere. Last but not least is the money you’ll save on postage. If you mail out 10 checks per payroll over the course of 1 year you will have spent $114.40, why not keep this money in your pocket.
The suggestions the APA give for increasing participation are as follows.
- Educate and gain support of top management
- Encourage new employees to use direct deposit and review in employee orientations
- Increase visibility of direct deposit to employees
- Know and understand your non-participants, offer pay cards (Payroll Experts can help you)
- Play the “Guaranteed Card”
- Use holidays, storms, and hurricanes to your advantage.
- Be focused and persistent
- Sell them on the convenience
- Studies show that those who use direct deposit save on average of $25.00 per month more than those not on direct deposit by automatically depositing to a second savings account.
Direct deposit is effective and dependable and will ultimately save your company time and money. If you have questions about Direct Deposit or the Paperless Payroll Services of Payroll Experts please do not hesitate to contact us.