When it comes to paying employees, there are few payment methods employers can choose from. The most popular option in the increasingly cash-less world is direct deposit. However, handwritten or printed checks are still quite prevalent, especially for small businesses. As a business owner, understanding the pros and cons of each option will help you make the best decision moving forward.
The Pros and Cons of Direct Deposit
Pros of Direct Deposit
1. Save Time
Employees are able to choose which account, or accounts, they would like their earnings to be deposited into and will have immediate access to those funds. Direct Deposit also doesn’t require that the employee be at work to accept their payment. This automatic transaction relieves the pain of having to make multiple trips to the bank for both the employee and the employer.
2. Security
The great thing about direct deposit is that it can’t be lost, stolen or misplaced. This makes both the employer and the employees’ lives easier as they don’t have to worry about paychecks falling into the wrong hands. Direct deposit is a confidential and secure process for everyone involved.
Cons of Direct Deposit
1. Bank Fees
While direct deposit doesn’t require extra supply costs, it can involve set-up fees for your business. These days, direct deposit fees can cost you anywhere from $50-$149 depending on the size of your business. Some banks even charge ongoing monthly fees. This is something you’ll want to look into at your bank before set-up because that money really mounts up over time.
2.Time Sensitivity
In order for direct deposit to be available every payday, you must collect and keep track of time and attendance records. No one wants a late paycheck and expediting the payroll process at the last minute can result in more fees.
The Pros and Cons of Paper Checks
Pros of Paper Checks
1. Save Money
The cost of distributing and depositing paper checks is low as all the employer needs is a bank account, which can cost anywhere from $25 to $100, depending on the bank. If employees want to skip the bank account set-up fees, they can choose to cash their checks instead at a check-cashing facility like Currency Exchange.
2. Privacy and Complete Control
Paper checks offer more privacy for employees who would rather not share their bank account information with their employer. By keeping their bank information private, employees have more control over who is allowed access to their information and account.
Paper checks also allow employees flexibility with what they can do with their earnings. Once a paper check is made out to the employee, they can choose when and where they want to cash or deposit it.
Cons of Paper Checks
1. Easy to Misplace
Paper checks can be easily misplaced, stolen and even damaged if you’re not careful with them. If a paper check is lost, then the employer and employee must replace the check, costing both parties additional time. In some cases, replacing a lost check comes at an extra fee for the employee.
Lost or stolen checks are a threat to your business. Paychecks list sensitive information such as the business’s name, address and the employer’s signature. Your business’s account and routing numbers are also listed on checks. This information is invaluable to someone looking to access your bank account as it gives them all of the information they need.
2. Time and Fees Mount Up
Depositing or cashing paper checks means doing so on bank time. Depending on the time and date the employees receive their paychecks, they may not be able to cash their checks until the next business day. Most banks are closed on holidays and have limited hours on weekends, which can be inconvenient for employees.
Cashing or depositing paper checks means extra time spent driving to and from the bank for employees. For employers, distributing paper checks requires ordering supplies, which takes additional time and money, especially if you’re printing them yourself.
Cashing Paper Checks or Setting Up Direct Deposit at Currency Exchange
Whichever method you choose to offer your employees, Currency Exchange can help them get their money faster and easier! We offer services such as Direct Deposit and Check Cashing. With our SecureCheck™ Direct Deposit program, employees can get their checks sent electronically to the Currency Exchange most convenient to them. Our services are designed to make pay day easier for employers and employees, so that everyone can reap the rewards of a hard day’s work.
