More than half of the employees today are being paid through direct deposits. Though this mode of payment may depend on the company and will of employees for accepting pay directly in their bank accounts. Direct deposits generally require an initial activity (onetime effort) of collecting bank account details like Account Name, Account Number, and IFS Code etc. To avoid this process and the need to verify all details prior to making transactions, companies have started opening salary accounts for employees wherein direct deposits are simplified.
Direct deposits can benefit both employees and employers in several ways. Some of them as listed as follows-
There are many ways of paying employees, i.e. through cheques, cash deposits or direct deposits. Cheques and cash deposits can involve the need to make repeated visits to bank for dropping in the bank, writing the details carefully every single time the payment has to be made, waiting in a queue, schedule visits considering bank holidays, lunch timings and working hours etc. and then finally waiting for 2 to 3 working days for the payment to be cleared and released into the bank account.
Whereas through direct deposits, as many number of beneficiaries can be added to the account from which the payments are supposed to be made. The details for adding beneficiaries will involve inputting the details only once and can be retrieved automatically every time the payment is processed. Within no time the payment is reflected into the beneficiary’s account and all this is done online at the convenience of fingertips.
- Cost Effectiveness
The payroll process can be successfully concluded only after the payment is released to all the employees on the pay day. Direct deposits can save costs primarily by minimizing the use of paper i.e. pay cheques and other stationary like pens/pencils, paper clips, envelopes and more. Also, the precious time and efforts spent by HR or accounts people in preparing cheques can be too laborious and costly affair. Moreover, costs involved in securing lost cheques, reissued payments or stopping payments cannot be ignored.
Direct deposits on the other hand can be managed directly through payroll software without involving risks of human error. They are calculated automatically considering absenteeism, leaves, overtime, bonuses etc. and so this minimizes the need to reissue payments or stop wrongly made transactions. Besides, this also optimizes the working hours of employees by eliminating the need of taking extended breaks for depositing cheques in banks.
- Paperless Approach
Paper cheques or cash deposit slips/counter files can use up approximately hundreds of gallons of fuels in a year. Direct deposits are processed online and also generate receipts that can be stored on laptops/PCs for future reference.
- No Identity Theft
We never know who can encash the cheque (if lost or stolen) in their name unless it is crossed. There is always a chance of theft till it is finally cleared and deposited in the respective bank account. While direct deposits or electronic transactions can be settled without any information being leaked to a large number of people.
If you are in favor of direct deposits to add to your payroll efficiency, adopt PayWheel- a comprehensive payroll software that aids you in end-to-end payroll processing. For more details visit www.paywheel.com and drop us an enquiry.