If you’ve been putting off setting up payroll direct deposit, you’ve come to the right place. Read on to learn about the benefits and drawbacks of direct payroll deposit. You’ll also learn about the costs and set-up process. Of course, whether payroll direct deposit is correct for you is up to you. But read on if you’re wondering whether it’s suitable for your company. Here are some things to keep in mind:
Drawbacks of Direct Deposit
While payroll direct deposit is a convenient way for employees to receive their pay, it comes with a small fee. This fee offsets the numerous benefits of direct payroll deposit. For starters, direct deposit cuts down on time it takes to write and mail checks. Because you no longer need to worry about lost bills, you save time and can better manage your own money. Another benefit is that a direct payroll deposit is better for the environment because it eliminates the need to print checks and reduces the amount of greenhouse gas emissions.
Another drawback of direct payroll deposit is that paper checks take longer to cash. Employees must either cash the check immediately or deposit it with another financial institution. This could take up to two pay periods to process. Additionally, paper checks pose a risk of fraud. For example, a thief could alter or fake a check to steal your cash. The time it takes to cash a check is also essential because employees without bank accounts may prefer other methods.
The Convenience of Direct Deposit
One of the most significant benefits of direct payroll deposit for employees is that it eliminates the need for employees to go to the bank to receive their checks physically. Instead of worrying about where they may misplace the check, they can divide their salary into different accounts, saving time and money. The process of setting up a direct payroll deposit is simple. The employer needs to provide the bank account information, and a payroll service will transact on the employee’s behalf. Depending on the bank, a direct deposit set-up fee can range from $50 to $149. Some banks also charge monthly fees if the account is maintained through payroll services.
Another benefit of direct payroll deposit is its simplicity. Unlike the traditional paper check, direct payroll deposit is instant, saving employees and employers a great deal of time and energy. The time spent writing and delivering checks is significant and can add to substantial savings. Additionally, a direct payroll deposit will reduce costs associated with lost checks, stop payment charges, and investigate lost reviews. Direct deposit also decreases absenteeism and helps the environment.
Costs of Direct Deposit
Employers have several options when it comes to setting up direct payroll deposits. While most banks offer free checking to employees who use direct deposit, some may charge set-up fees. On average, banks charge between $50 and $149 for the set-up fee, while monthly fees can range from $1.50 to $1.90 per transfer. Therefore, businesses should compare costs and fees among banks to find the best fit for their needs. Fortunately, payroll direct deposit costs can be surprisingly affordable for most companies.
In addition to eliminating the need for physical checks, direct deposit can reduce overall payroll costs for employers. With this option, you’ll save money on mailing supplies and other costs associated with cash payments. In addition, direct deposit reduces the risk of check loss and theft, two essential business considerations. Additionally, direct deposit eliminates the need for paper checks and can help you better plan your cash flow projections. Paper checks can be costly to cut, while direct deposit removes this hassle.
Process of Setting Up Direct Deposit
Setting up direct payroll deposits starts by entering the appropriate information for each employee. To do so, go to the company information screen. Then, choose the correct bank routing and account numbers in the Direct Deposit option. Make sure to include the Balancing Entry if your bank requires it. Then, specify the processing window, which is the number of business days before the employee’s pay date.
If you’ve already registered with a payroll service, all you have to do is fill out a simple form with the information for each employee and their bank account. Some payroll software will request a voided check before the direct deposit occurs. Once you’ve completed the form, you can send it to the payroll service. After you’ve confirmed that it’s correct, run a few test deposits to ensure everything is working.