One of the most important aspects of operating a business is compensating employees. Not only does Payroll involve how much you’ll pay your workers, but also how and when. While many employers continue to pay their workers through old fashioned paper checks, there are a number of advantages you’ll gain by switching to direct deposits. These benefits can be broken down into three main advantages, which are security, convenience, and cost.
Direct Deposit Provides Greater Security
Identity theft has become a serious issue, one that will not go away anytime soon. Paper checks which are given to employees in person or sent to them through the mail have enough personal data on them that a criminal seasoned in identity theft can use it to steal their identities. Paper checks can be lost or they can be stolen, and in either case, the employee will be put at considerable risk. By contrast, when compensation is distributed through direct deposit, there won’t be any physical checks for thieves to steal or personal information for them to access.
Direct Deposit Is More Convenient
There are a number of inconveniences involved with traditional paper checks. In addition to the fact they contain personal information that can be used for identity theft should they end up in the wrong hands, they must also be physically deposited in a bank. This requires employees to go to the bank and wait in line, and if they do so on a Friday, the beginning of the month or right before a holiday the line will be long.
Banks for their part are becoming increasingly automated and some discourage employees from visiting tellers, encouraging them to use ATM machines instead. For instance, Bank of America has begun charging some employees a small fee each time they visit a teller for something that can be performed at an ATM. Other large banks will likely follow suit, giving employers one more incentive to switch to direct deposit.
Direct Deposit Is Cost Effective
The biggest advantage that employers will personally gain from switching to direct deposit is lower payroll costs. It takes a tremendous amount of money to pay for the ink and paper necessary to print paper checks, and it isn’t very environmentally friendly towards trees. Ink in particular is very expensive as are the large, industrial sized printers needed to print lots of checks for hundreds of workers. A Fortune 500 or 1000 firm can save millions by switching to direct deposit, while smaller business will save tens or hundreds of thousands.
The money that a company saves by switching to direct deposit can be used for other things, such as marketing and advertising, or new equipment which can make employees more productive. No matter how you look at it, paper checks are a relic of the past while direct deposit is the wave of the future. It is faster, more convenient and ultimately more secure that issuing a check in paper. It provides multiple benefits for both employers and employees.