Page 129 - Essentials of Payroll: Management and Accounting

ESSENTIALS of Payr oll: Management and Accounting
It can be difficult to get employees to switch over to direct deposit.
Though the benefits to them may seem obvious,some will prefer to cash
their own checks; then there are those who do not have bank accounts.
To solve this problem, an organization can either force all employees to

accept direct deposit, or implement the practice only with new hires
while allowing existing employees to continue to receive paychecks. If
employees are forced to accept direct deposit, the company can either
arrange with a local bank to give them bank accounts or issue the funds
to a debit card (see the preceding best practice).
Another problem for the company is the cost of this service.A typ-
ical charge by the bank is $1.00 for each transfer made, which can add

up to a considerable amount if there are many employees and/or many
pay periods per year. This problem can be reduced by shrinking the
number of pay periods per year.
Implementing direct deposit requires the company to transfer pay-
ment information to the company’s bank in the correct direct deposit
format, which the bank uses to transfer money to employee bank
accounts. This information transfer can be accomplished either by pur-
chasing an add-on to a company’s in-house payroll software or by paying
extra to a payroll outsourcing company to provide the service;either way,

there is an expense associated with starting up the service. If you have
trouble finding an intermediary to make direct deposits, it can also be
done through a Web site that specializes in direct deposits. For example,
www.directdeposit.com provides this service, along with upload links from
a number of popular accounting packages, such as ACCPAC, DacEasy,
and Great Plains.
And because some paper-based form of notification should still be

sent to employees, so that they know the details of what they have been
paid, keep in mind that using direct deposit will not eliminate the steps
of printing a deposit advice, stuffing it in an envelope, or distributing it
(though this notification can be mailed instead of handed out in person).

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