Direct Deposit means Direct Savings
Payroll processing is one of the most complex systems that businesses have to deal with on a regular basis. These transactions form part of the core of the employer-employee relationship and must be handled accurately so that businesses can dispense with the tasks efficiently. Employees should be compensated in a timely manner because it is the law, and it enhances morale while building trust between employers and employees.
Complexities of Payroll Processing
Payroll is built from a mountain of data, including federal, state and local taxes, premiums for various insurance products and all forthcoming compensation. These data must be collated and all collections for taxes and premiums must be forwarded to the right agencies as appropriate. Non-standard deductions that may also be collected against salaries include court-ordered garnishments, contributions to employer-based retirement plans and health savings accounts.
These processes have to be completed weekly, bi-weekly or monthly, making the tasks tedious and labor-intensive. To complicate matters even further, payroll errors and glitches will be unsettling for employees and may become grounds for complaints and lawsuits.
Automating the Payroll System
Automation of the payroll system in conjunction with other human resource systems will streamline the process of data collection, recording and reporting. Payroll preparation is simplified and human error is minimized.
Automation makes it convenient to process payroll online under a secure environment and possibly outsource the entire process to a third party, freeing up key employees to address core business concerns.
As part of an automated payroll system, scheduled compensation can then be paid out to employees to their designated personal accounts via automatic deposit.
Automatic Direct Deposit as an Add-on Employee Benefit
Without a doubt, direct deposits simplify the distribution end of payroll processing. However, this system of payouts also benefits employees in several ways.
It eliminates the need for checks that typically take a few days after depositing to clear the bank’s processing system. With direct deposits, employees can access their money within a few hours after payroll release. Employees can access their balances even after bank hours on the day of the transfer.
Automatic deposits are secure transactions. Checks are never delayed or lost in the mail because payouts go directly to the payees’ accounts. Privacy and security of information is better given that fewer people are involved in processing the payroll.
According to the National Association of Federal Credit Unions, dealing with direct deposits can save employees at least $5.88 per check, considering the direct and indirect costs associated with cashing a check. Assuming bi-monthly payments, this amount accumulates to $150 by yearend.
Clearly, employers and employees benefit from a payroll system that involves the use of automatic deposits to distribute salaries and wages.
For more information, contact Integrated Payroll Services, Inc. (iPS) to see how automatic direct deposit can benefit you.