Direct deposit is a second name of ease for salaried employees. According to the 2023 “Getting Paid in America” survey, 95% of US employees are paid by direct deposit. Well, for a company, it can be chaotic to handle direct deposit for employees. Think of it as if you have 150+ employees, and you need to process direct deposits manually. It is such a terrifying and tiring task.
But there’s nothing to worry about! The solution is on the way! You can use the payroll direct deposit feature for your benefits. Still puzzled? Let this blog explain everything to you:
What is Direct Deposit Payroll?
Direct deposit payroll is software designed to process payroll with minimal effort. Instead of the traditional payment method (paying by check), the salary is directly transferred to the employee’s bank account. On top of that, there are tons of benefits for direct deposit payroll, both for employees and employers. You can count on ease of pay transfer, seamless experience, and 0% chance of check lost.
Types of Payments Eligible for Direct Deposit
Direct deposit can be used for various types of payments, including:
- Payroll: Regular salary payments.
- Government Benefits: Payments such as Social Security or unemployment benefits.
- Reimbursements and Bonuses: Any additional compensation or reimbursements for expenses.
Benefits of Direct Deposit Payroll for Employers
When it comes to businesses, the major focus every business has is finance. Suppose something is saving you time and money, that means it is beneficial for your business. Well, let’s explore more benefits of direct deposit payroll offer for employers.
Cost Saving:
Payroll processing require a lot of administrative efforts. Additionally, if you have a large employee base you will need additionally human resources to tackle the task. Ultimately adding burden to your budget.
Furthermore, direct payroll transfer is electronic transaction so there are no paper printing and check involved. As a result reducing the cost even more. Moreover, it contribute to sustainability as well.
Ease and Convenience:
The second benefit you get with direct deposit is ease and convenience. Now, you don’t need to sign a large number of checks during payroll time. You can automatically schedule payments for the month and effortlessly run payroll. Feels too good to be true? Well, it’s true!
Talking about E-Work Force payroll systems, convenience is all we are proud of. Once you register for our payroll system, you need to create a company. After that, enter employee records and pay schedules. And boom! Your payroll automation system is all set to involuntarily calculate and run payroll in a few clicks.
The program comes with added features like bank integrations and payment schedules. You can choose to pay your employees and contractors on:
- Monthly
- Bimonthly
- Weekly
- Biweekly
0.007% Chance of Errors:
Suppose we consider manual payroll systems. Mistakes happen more often as compared to what a person might think of. According to the US Bureau of Labor and Statistics, 1.2% of errors are estimated per payday by a small business. Well, that’s not the end here! As per IRS information, 40% of businesses face penalties due to errors in tax deposits.
In short, error rate with manual pay calculation lead to significant financial problems for businesses. However, direct deposit reduces chances of error to the least possible. As all data is handled by computerized programs there is no eventuality of mental fatigue and mistakes.
Automatic Pay Stubs and Tax Calculation:
Gone are the days when generating paystubs took administration hours and days. In this digital era, with state-of-the-art payroll automation software, you can automatically generate pay stubs with direct deposit. Additionally, with each direct deposit, the tax of the employee is automatically calculated and withheld.
Benefits of Direct Deposit for Employee
In the corporate sector, software that benefits both employers and employees is considered effective. So, applications that offer payroll services must be beneficial for employees, too. Below, we discuss some benefits employees can get with direct deposit:
Fast Pay:
Have you heard of same-day direct deposit payroll? Well, direct deposit is the fastest way to receive wages. Who has time to stay in long lines to deposit a check in the bank? Well, we all have important stuff to do other than waiting for deposit numbers in lines. Additionally, the bank processes checks for at least three days. But with direct deposit payroll, employee get their salaries on the same day in their personal bank account.
Fast Fact: According to the American Payroll Association, 70% of employees face challenges due to late pay processing.
Convenience:
By direct deposit, payroll systems funds are transferred digitally. So, there is no need to visit the bank every month to deposit your salary. Additionally, direct deposit can electronically transfer money into both current and savings accounts.
Enhanced Security:
Direct deposit increases security by providing bank-to-bank transfers. You can say it eliminates the risk of stealing checks and losing them. Furthermore, payments are automatically processed, ensuring employees don’t have to worry about delays.
Pay Stubs:
As direct deposit is just a feature of payroll automation software, employees can get their pay stubs after direct deposit. All they need is logging into their accounts and hitting pay stub in the menu. From there they can easily download or print it for further use.
On top of that, employees get electronic pay slips which make is easy to keep record. Additionally, these record can be exported in multiple formats.
How to Implement Direct Deposit in Your Organization
Let’s take the E-Work Force Payroll system as an example to see the step-by-step process of implementation. Look, direct deposit means saving 30 hours per month that you were going to spend on manual pay processing. Let’s look at the steps that would help reduce this time to 2 or 3 hours a month. Significant chunk, right?
Steps for Employers
- First of all you need to buy a payroll automation system with built-in direct deposit features. Although, you can go for stand alone payroll direct deposit but having a combo deal will save you money. So, choice is all yours!
- Next get the log ins and create your company. Fill up required details such as company type, city, address and other relevant information.
- Now, you need to fill up all employees data. Don’t worry, it’s a one time process that will serve you for years.
- Once you are done with basic details. You can move to direct deposit set up. Typically the 6th option in left menu.
- There you will provide the company’s necessary information again. Moreover, you need to fill out an authorization form, provide a form of EIN, and a voided check.
- After all these steps, you will be required to do penny verification. And once it’s finished, ta-da! Your account is ready to use for direct deposits.
Quick Note: If you struggle on any step you can call E-Work Force Payroll team for help. After all we care for your facilitation!
Employee Authorization Process
- Provide employees with a direct deposit authorization form.
- Collect necessary information, including bank account details and routing numbers, ensuring data privacy and security.
Best Practices for Managing Direct Deposit
A good rule of thumb is to stay updated with all information about managing direct deposit. However, if you are working with E-Work Force Payroll applications, you won’t get any problems. However, staying on top of the information bar and security updates is crucial. Here are some best practices to keep and manage your direct deposits.
Regularly Update Employee Information
Make sure you regularly update employee information in your record. As we always say, wages are the biggest motivation for employees. Messing with wages can negatively harm your business. Ensure you don’t pay direct deposit into someone else’s account.
Furthermore, you need to regularly remind your employees to update their details if they change banks and accounts.
Monitor Payroll for Issues
There are very rare chances of issues in a robust payroll automation system. However , stay vigilant in monitoring payroll system to immediately identify errors. It will help you rectify issues that occur. That way you will prevent potential disruptions in payments.
Provide Clear Communication
Maintain open lines of communication with employees regarding their payroll. This includes notifying them of any changes to the direct deposit process and providing resources for assistance.
Conclusion:
See! Direct deposit is needed for the payroll in the current business era. It’s the time when efficiency matters the most. So, having a powerful tool for maximizing payroll efficiency is all you need to save time and valuable money. For instance, an employer with X number of employees can run the whole direct deposit payroll in a few clicks.
In addition to that, you will be able to improve employee satisfaction, which is a big plus. In fact, what can be more satisfying than having an on-time salary in a secure manner? You got the idea! So, Embrace the future of payroll now, where simplicity meets security. And watch your business grow as you put time and money back where they belong: in your hands!
Common Concerns and FAQs About Payroll Direct Deposit
How do I do payroll direct deposit?
Select a payroll software that offers direct deposit options. A popular option is E-Work Force Payroll. After that, log in to your software and provide employee information. It must include:
- Bank name
- Account number
- Routing number
- Type of account (checking or savings)
Once done get a direct deposit authorization form signed by your employees. It confirms you both agree to direct deposit salaries. Once done, inform you employees about payroll dates and other related information. That’s all!
How much does direct deposit cost?
Typically, there is no cost involved in direct deposit. Yeah, the software and service may charge you for direct deposit. It can be setup fees and direct deposit fee. Some services even charge per employee for direct deposit services. However, banks usually don’t charge fees for direct deposits.
How long does it take payroll to process a direct deposit?
Typically it takes 1 to 3 days to process a direct payroll services. Sometimes you get same day direct deposit while other times banks need to verify funds and make them available for you.
Additionally, most payroll provider might ask you to provide payroll details 3 days before actual payroll to verify data and make the payroll process smooth.
How does payroll direct deposit work?
Payroll direct deposit works by getting employee information in the system, including their bank accounts, account types, and other relevant details. Once the system gets the details, it will ask you for a direct deposit date; provide that, and now you can automatically run payroll.
Most of the systems for payroll direct deposit are semi-automatic. And it’s preferably a good idea to run payroll semi-automatically. You still need some manual clicks to process, which makes the payment system more reliable.
How much does direct deposit cost a business?
Usually, it cost less than manual payroll process which include printing and paper. Direct deposit cost you $0.10 per transaction which is less than manual payroll processing. Additionally, the cost of hiring payroll staff, extra workload during pay days are all expensive for small and medium size businesses.
How are direct deposit payroll cards and paper checks similar?
Direct deposit payroll cards are an alternative to electronic direct deposit. Direct deposit payroll cards are pre-credited cards by employers. One of the major benefits of these card is its reliability. Talking about similarities, direct deposit payroll cards, and paper checks both need you to verify your identity before receiving payments.
Can I cancel a direct deposit payroll?
Yes you can cancel your direct deposit payroll. But, be mindfull of timings and pay schedules. It is recommended to not cancel deposits near pay days. Talk to your payroll provider and provide necessary details to cancel a payroll direct deposit. Meanwhile, if you are canceling payroll direct deipost for a specific employee you need to arrange alternate payment methods for your employees. It can be paychecks or direct deposit payroll cards.
How do you cancel direct deposit payroll?
Once you plan to cancel direct deposit payroll, immediately communicate to your payroll service provider. Additionally, if you are working on an automated payroll application you can cancel payroll more easily. Just few clicks and you are done. Although, if you cancel direct deposit payroll ensure you have an alternate payment method to pay your employees on time.
When does payroll need to be submitted for direct deposit?
Three days before actual pay day. Most of the payroll services require you to submit direct deposit details prior to pay schedule. It help them verify all employees information and process payrolls on time.
