Cost Savings Drive Adoption
of Direct Deposit of Payroll
Companies can save anywhere from $0.50 to $0.60 per payment by using direct deposit instead of checks to pay employees, according to the Direct Deposit and Direct Payment Coalition.
Nearly two-thirds of Americans (65%) receive their pay through direct deposit, and usage continues to grow, the coalition reports.
Direct deposit of payroll eliminates the cost of delivering checks to employees at different locations, lost or stolen checks and charges for stop payment and replacement checks. It also can save your company time by simplifying payroll reconciliation and streamlining end-of-year tax reporting. By paying employees electronically, you also can reduce the time you spend storing and securing checks.
Employees benefit, too
Direct deposit can benefit employees by simplifying their payday routine. Whether they are in or out of the office, pay is available for withdrawal at a nearby automated teller machine.
Also, since employees can direct portions of each paycheck into multiple accounts and/or financial institutions, direct deposit helps them manage their finances.
Furthermore, it’s fast. Typically, employees who use the service have their pay in their bank accounts on payday—and they don’t have to wait for their check to clear.
The coalition reports that 97% of employees who use direct deposit are very satisfied with it.
Getting started
A company of any size can offer direct deposit of payroll to its employees. Here’s how it works:
An employee completes a standard enrollment form that authorizes the company to make direct deposit payments into one or more of the employee’s bank accounts. The company processes the next pay period’s payroll, prepares an Automated Clearing House (ACH) file and delivers it to the employee’s financial institution one or two days prior to the effective date.
The employee’s financial institution processes the information and on settlement day posts the payment to the employee’s account.
The company usually gives the employee a paper record of the payment, and the employee’s financial institution reports the transaction on his/her monthly statement.
To find out how easy it is to start your own direct deposit payroll program through Cole Taylor, contact our Cash Management team at (312) 442-5070.
The coalition reports that 97% of employees who use direct deposit are very satisfied with it.
Visit us at
www.coletaylor.com
