Choosing a Method to Pay Employees
Employers know that one of the most crucial elements of any business is its employees. And any employee will tell you that being paid is of utmost importance. It’s the employers job to choose payroll software or a payroll system that can handle the unique requirements to correctly calculate employees’ pay, pay them on time, and provide the employer information they need on labor costs. Another decision is what method an employer should use to pay its employees. Here are some options to consider.
Paper Checks. The traditional way to pay employees is by printed check. During the payroll process, a payroll system should have the ability to print the stub and check information on pre-printed check stock, or an option to print on blank check stock. The benefit to using printed checks is that many people are already familiar with it. The downside is that employees still need to deposit the check, which requires time and travel cost making a trip to the bank. Employees may find the additional process annoying, and there is also the potential for lost checks, which creates more work for the staff to replace the lost check.
Direct Deposit. Direct deposit is the term for having employee pay deposited directly into their bank account on pay day. Most payroll systems will either create an ACH Direct Deposit file or provide some type of third party Direct Deposit option. Some systems will even allow for depositing to multiple accounts, useful for those wanting to have a portion go to their savings account. Using direct deposit can be a much more convenient way for an employer to pay, since it reduces cost of purchasing check stock and decreases the amount of staff resources to print the checks, put them in envelopes, etc. Typically employees are simply given a ‘pay advice’, printed on white stock paper which acts as their pay stub. (Some payroll systems may also allow a way for employees to simply go online to access their pay information.) Employees like the fact that the money is already in their account on pay day, without having to take additional steps.
Pay Cards. Some employers may have employees who do not have bank accounts. In this case, using pay cards is a good way to pay employees with a Direct Deposit process. Pay is simply deposited to the employee’s card account on pay day and is available for them to use immediately. One thing to keep in mind is that employees may incur fees for withdrawing their money. That’s why it’s important to find the right pay card company, and provide options for employees to withdraw money without high fees.
Employers should always consider their employees when choosing which pay option is best. Giving employees the option on how to be paid can be helpful to employees, but may create more work for the employer. Also consider the current payroll software or service, and what its capabilities are for employee payments. Choose a method that is easy enough to process for the employer, yet can handle the needs of its employees.