Direct Deposit. It is considered by many employees, as well as the companies that handle the payroll services of their employers, to be the Holy Grail of payroll disbursement options. The vast majority of employers nation wide offer Direct Deposit as their primary method of paying employees. This may lead one to wonder why the practice is so widespread. What exactly is it about Direct Deposit that makes it the bread and butter of just about every payroll company out there? Our team of payroll accountants in Chelmsford, MA has several answers to that question.
Typically the reasons most providers of payroll services love to promote the use of Direct Deposit fall into one of two categories: Employer Benefits and Employee Benefits. Truthfully, most of the Employer Benefits are attributed to various forms of cost savings. Prime examples of this include the ability of an employer to gain and exercise greater control over their payroll process and expenditures, while also generating and disseminating online transaction reports on an almost instantaneous basis. Direct Deposit also helps to reduce the amount of time and effort personnel have to spend on bookkeeping activities, which helps to control costs.
Whereas most of the Employer Benefits are related to cost savings, most of the Employee Benefits are tied to convenience. First off, they get their money faster due to the drastically reduced processing time offered by Direct Deposit. Second, employees do not have to be present at work on payday in order to pick up their paychecks, nor do they have to wait for the mail carrier – the money is already in the bank! A third benefit can be found in the increasingly growing practice of banking institutions offering free checking accounts when those accounts are set up to receive Direct Deposit. Additionally, many employers and providers of payroll services allow employees to designate multiple accounts for their funds to be deposited into, such as retirement or savings accounts, in addition to their normal checking accounts.
All of this helps to build a very strong reasoning behind the prominence of Direct Deposit in the world today, but there is one more reason that Direct Deposit is such a good idea: it helps to deter identity theft. One of the more common methods by which identity theft is achieved is by means of lost or stolen checks, such as paychecks. By eliminating the need for such checks through the provision of Direct Deposit through their chosen payroll company, employers are actually helping to keep the identities of their employees secure.
If you are considering Direct Deposit for your business, or if you have questions about any of the above benefits, please feel free to contact our team of accountants in Chelmsford, MA at 1-978-251-3003 today!