It’s been an odd winter. It’s April and it snowed—again—in the northeast. While most cities did not have record-breaking snowfall this season, there were several inclement weather days when clients couldn’t get to their offices or payroll delivery services were delayed due to treacherous road conditions. That impacted some employees getting paid, specifically those without direct deposit.
While there are workarounds to ensure employees who receive paper checks get paid, the inability to get to the office highlights the fact that direct deposit makes payday easier for employers and employees. Among the benefits, direct deposit:
Given all the advantages, why do employees and employers resist adopting a payment method that 82% of U.S. workers benefit from? Reasons cited by employees include the absence of a bank account, distrust of financial institutions, and the inability to locate convenient ATMs to inexpensively access their cash. Employees may also resist giving out personal banking information such as account and routing numbers due to fear of identity theft.
Some workers do not have bank accounts because they do not have the resources for an initial deposit or to maintain the balance required to waive bank fees. Others lack the paperwork, including photo identification with a current address that is required to open an account. Also absent are secondary sources to confirm an address, such as a utility bill or mortgage statement.
Employers may find that their employee turnover is significant enough that taking the time to set up and maintain direct deposit is not warranted. Employers must also get and keep written authorization for direct deposit from employees. When errors are made, it can be more convenient for an employer to issue a stop payment on a check than to retrieve funds erroneously deposited.
Given that more than 8 in 10 employees use it, the benefits of direct deposit must far outweigh the drawbacks. Of course, paycheck and direct deposit concerns can be alleviated working with a competent payroll provider. Employers save time and expense. Employees have immediate access to cash on payday. It’s a win-win.
And when the weather app shows a snowflake for this Friday, no one has to panic wondering if there’ll be funds in their bank account to buy milk, bread and that last round of firewood, in case the power goes out…again.
For more information about direct deposit and how it can work for your business, click below.
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