Direct Deposit of Payroll
There are two compelling reasons to utilize direct deposit of payroll: convenience and security. Because the transfer of payroll funds is done electronically, your payroll is completed in a timely manner with measures in place to eliminate theft and fraud. These processes allow you to spend time and effort on growing your business rather than chasing paper or dealing with security nightmares.
Do Small Businesses Really Need Direct Deposit?
No matter the business size, direct deposit reduces bank transactions, simplifies bank reconciliation and minimizes the margin of error since it creates only one draft for all net pays. In addition, a direct deposit can’t be lost, stolen, altered or forged.
How Does Direct Deposit Work?
A payroll outsourcing provider of paperless payroll, such as PayrollonaBudget.com, is an expert in direct deposit and will manage this function for you through NACHA, a secure electronic payments association. They process your payroll, creating a voucher for employees rather than a live check. This voucher contains the same information as a payroll check with the security and simplicity of being sent directly to an individual account designated by the employee. The voucher can be printed or viewed online for seamless paperless payroll.
Does Direct Deposit Follow a Normal Pay Schedule?
Your payroll will be processed as normal through your payroll outsourcing provider. They will create two types of drafts: a debit direct deposit draft and a credit *ACH direct deposit. This is done for each net pay two days prior to the payroll check date. At that time, the credit ACH direct deposit is available at the opening of business in the employee’s bank account. If they do not have a bank account, you can offer something called payroll debit cards. This works much like an ATM card. The payroll funds are electronically deposited into an account for this card and the employee uses it as a debit card.
* a type of electronic funds transfer system
Can a Direct Deposit Be Made to Any Bank or Credit Union?
You can make a direct deposit to any bank account at a financial institution that is part of NACHA. This excludes most foreign banks or bank accounts. You also can make a direct deposit to a payroll debit card issued through a NACHA institution as long as the address is located in the U.S.
Direct deposit of payroll checks offers convenience and security to you and your employees. For more information on this subject and the NACHA and ACH visit these links: www.directdeposit.org and www.NACHA.org.