Getting paid on time is one of the biggest motivations for employees and should be the top priority for employers as well. Along with that, your employees might also prefer how they are paid. In addition to traditional wages, electronic options also differ in terms of processing time and convenience. Learn how each method works and the pros and cons to help you decide.
1. Physical Cheques
It is the traditional way to pay employees. For each pay period, you process payroll, print cheques, etc, are distributed to employees. I Some companies prefer conducting the monthly payment through payrolls, while others send paychecks.
Advantages of using Paper Cheques
Here are the advantages of using paper checks to make employee payments: Familiarity: when an employee is paid by cheques, they can be sure of the payment and need not worry about the disruption in payment.
Flexibility: Your employees don't need a bank account to get money. For a fee, they can use a cheque deposit service.
Bank details are not shared: Some employees prefer paper cheques to keep their bank details private. Direct deposit requires employees to provide their bank account information, which can make some people uncomfortable.
Disadvantages of Paper Cheque
Possible disadvantages of using paper checks are:
Slower: The check must be taken to the bank and processed before it can be cashed. Some banks take a few days to process checks, which can leave your employees waiting for money.
Time consuming: Processing paper cheques take a lot of time for your payroll department, especially if you have a large number of employees. After processing payroll, they must print and distribute each paycheque separately.
Increased Costs: Creating physical controls will increase your labor costs. You need multiple cheque booklets to perform the task. You also need envelopes for paychecks, even if you share them at work, to keep the information private.
Delays: If employees are on vacation or sick on payday, they must wait until they return to be paid. When you send paychecks, they can get lost or delayed in the mail, potentially putting employees in financial debt.
2. Direct Deposit
Since a number of employee receive their paychecks by Direct Payment, it can be said that this is a popular payment method. Your employees provide their bank account details. When you process payroll, their earnings are deposited directly into their bank accounts on payday via electronic transfer.
Advantages of Direct Deposits
The advantages of direct payment are:
Immediate access: As soon as the employees get their dates of payment, the payment arrives in the employee's account, they have access to the funds.
No Lost Cheques: Because the employee has nothing physical to accept, there is no risk of missing a payment as with a paper check.
Faster Processing: Setting up direct deposit can take some time because you have to enter your bank details. Once set up, it's quick to process.
Lower costs: Direct deposit can be one of the cheapest ways to pay employees because you don't need supplies. You will often pay certain fees, including monthly fees, setup fees and transaction fees. Some payroll software companies include direct payment at no extra cost.
Paper trail: Direct payment leaves a convenient accounting trial and errors are easy to trace when they occur.
Disadvantages of Direct Deposit:
Processing Time: Payroll timing is important when choosing direct deposit for employee payments. If you do not process it on time, the payment will be delayed and your employees will not be paid on the correct date.
Shared Bank Information: Some employees may not want to share their bank account information with you when they fill out new hire forms.
Bank Account Required: Your employees must have a bank account to receive their pay via direct deposit.
3. Cash
Paying employees in cash is not common, but it is an option. This is usually only possible if you have a very small business. Tax payments and other common deductions still need to be made if you have employees versus independent contractors.
Advantages of Paying in Cash
Here are some of the advantages of paying employees with cash:
No Fees: Money transfers eliminate the processing fees and supplies required by other payment methods.
Instant Access: You can guarantee your employees will get their money on payday when you give them cash. They can spend their salary immediately.
Disadvantages of Paying in Cash
Consider these Disadvantages of Paying in Cash:
Unwanted attention: Paying employees in cash can get unwanted attention from the tax department. The agency can take a closer look at your payroll because it's easier to remove incorrect tax amounts if you pay in cash.
No Paper Trail: Other payment methods offer an automatic paper trail that makes tracking easy. The cash register does not have this built-in audit trail.
Chance of Loss: If you have that much money, you risk theft. Employees can also lose money before they spend it or deposit it in the bank.
Inconvenient Deposits: When an employee wants their money in the bank, they have to drive to their financial institution to deposit the cash, which adds an extra step.
Time consuming: Cash payments may take more time to save. The money also needs to be transferred physically, which is also time consuming.
Why Do You Need to Choose Direct Payment from a Trusted Source?
Choosing the employee's payment method Deciding on the method of paying an employee's salary is not always easy. Account Mein-in the bank account, as the name suggests, making the payments directly in the bank accounts of retailers, promoters, and DSRs. We work like a single and transparent payments partner between the companies and their channel partners, removing the risks of pilferage and duplicity of payments.
Consider the following when making your decision:
Check state requirements: States regulate how many options you can offer for employee contributions. They may also regulate whether you can request a certain type of payment.
Consider employee preferences: You can't please everyone if you don't offer all payment methods, but getting feedback from employees can help you decide.
Compare Payments: See available payment options and their associated fees, which may vary.
Consider time usage: time-consuming payment methods like paper checks slow down your payroll. Some methods also make it difficult to save salary data. Electronic options sometimes cost a little more, but the time savings can make the fees worth it.