In this article, we will talk about Do you get paid by check or direct deposit? Employers may pick from a variety of payment options to make available to their workers. Direct deposit is one of the most common options. You may also pay workers using paychecks that are either handwritten or printed. Before determining which choice is the best for your company, you need carefully consider the advantages and disadvantages of each.
The benefits and drawbacks of paper checks
Some workers may want to use paper checks rather than set up direct deposits. There are advantages and disadvantages for both you and your staff.
Advantages of paper checks
Consider some of the reasons why you may want to pay staff using paper checks.
1. Control and privacy
Employees might have greater privacy and control over their wages when they use paper checks. Employees may keep their financial information secret from their employers by using paper checks. Some workers will not disclose this sort of information with you because they do not feel comfortable doing so. Employees may maintain control over who has access to their bank accounts and information by keeping bank information private.
Employees have total control over their earnings when they use paper checks. When an employee gets a check, he or she has the option of deciding when and where to cash it. They may wait to cash it if they like. Employees have the option of depositing their check into any bank account or cashing it.
2. Putting money aside
Depending on the bank and account type, opening a basic bank account might cost between $25 and $100. Employees will avoid paying the costs connected with establishing a bank account if they have the option to cash a paper check.
The disadvantages of paper checks
Consider the disadvantages listed below before issuing paper checks.
1. It is simple to lose
Paper checks might be misplaced, lost, stolen, or damaged. If an employee misplaces a check, both the employee and the company will have to spend more time refilling the check. Depending on how you handle the problem, replacing a misplaced check may result in an extra cost being charged to the employee.
Lost checks may also be hazardous to your company’s operations. The paycheck includes the name and location of your company, as well as your signature. Worse, your bank’s account number, routing number, and name are all printed on your paychecks. The information on a check may allow someone to get access to your company’s bank account and information.
2. Time-consuming and expensive
Employees who get paper checks may be unable to cash them on weekends and holidays. Depending on when the employee gets a paper check, he or she may have to wait until the next banking day to cash it. On weekends, most banks shut early and are closed on government holidays
The procedure of cashing paper checks takes time. Employees will have to spend more time depositing or cashing physical checks rather than having their salaries electronically deposited. Employees who have to go to a bank and stand in line to get their salary may find this time-consuming.
Direct deposit has both advantages and disadvantages
Before paying workers by direct deposit, consider the advantages and disadvantages of doing so.
Advantages of direct deposit
See below for some of the benefits of allowing your staff to get direct deposits into their accounts.
1. Savings in terms of time
Direct deposit is straightforward to utilize for companies, and it is simple for workers to get their paychecks. In addition, employees have the option of selecting which accounts they would want the monies to be placed into and having access to them immediately after they are deposited. As a result, employees will save time by avoiding the need to make several journeys to the bank.
Paying workers through direct deposit at any time and from any location saves time for both the employee and the company. Employees get direct deposit payments whether or not they are present at their place of employment.
2. It is completely risk-free to use
Direct deposit, in contrast to paper cheques, cannot be misplaced, stolen, or otherwise lost. Because you are a company owner, you don’t have to be concerned about a misplaced or stolen paycheck ending up in the wrong hands. Direct deposit is a secure and discreet method of payment for both workers and businesses.
The disadvantages of direct deposit
You may wish to examine the following factors before implementing direct deposit for your workers.
1. Fees are the first thing to consider
Despite the fact that it would reduce the cost of supplies, adopting direct deposit may result in an increase in set-up expenses for the employer. The cost of setting up a direct deposit might run anywhere from $50 to $149. Transferring money into an employee’s account may potentially result in a transaction fee being charged by your financial institution. Before going ahead with direct deposit, assess whether or not your company can afford the extra expenditures that would arise.
It’s possible that your staff may incur extra costs of their own. In order to receive compensation, employees must have their own bank accounts. If an employee does not already have a bank account, he or she will be required to acquire one, which will result in the employee incurring expenses.
2. The importance of timing
It is possible that direct deposit will not be accessible on payday if you do not gather time and attendance records and run payroll by a specific date. Employees do not like receiving their paychecks late. It is quite possible that if payroll is not completed in time for direct deposit, the company may be required to accelerate the payroll, which may result in additional expenses for the employer.