Question

Many employers no longer pay by cash or even check. The trend is to move to either direct deposit or pay cards (someday cell phone). Discuss the importance from both an employee prospective and an employer perspective of an employee reviewing their pay stub. What creative methods can a payroll professional use to help an employee understand their earnings, deductions and pay method?Many employers no longer pay by cash or even check. The trend is to move to either direct deposit or pay cards (someday cell phone). Discuss the importance from both an employee prospective and an employer perspective of an employee reviewing their pay stub.

What creative methods can a payroll professional use to help an employee understand their earnings, deductions and pay method?

Answer 1

IMPORTANCE / BENEFITS TO THE EMPLOYERS

· Your business can reduce the time spent on certain payroll-related tasks. One of the more immediate benefits of direct deposit is that time spent on preparing payroll is greatly reduced. Writing, signing, and folding the checks, stuffing them into envelopes, and delivering the checks to employees can be labor intensive. The time saved becomes significant, especially when multiplied by every pay cycle.

· Your business can save money by not writing, printing, and mailing checks. These costs are reduced as checks and envelopes are no longer required. Direct deposit can also help a business save money by:

· Reducing costs associated with re-issuing lost or stolen checks, stop payment charges that may be levied by a bank, and investigating when a check has gone missing.

· Realizing savings in absenteeism, since employees no longer need to take extended breaks to deposit or cash their checks.

· Allowing human resources and payroll staff to avoid having to stay in the office to manually prepare checks.

· Your business can pay employees on time. There may be times when you're unable to process payroll before the check date. With advancements in electronic payment technology like same-day ACH, your business can have more control over your funds.

· Your business can be more environmentally responsible. Having a paperless payroll system is environmentally friendly because it reduces a company's carbon footprint. The green impact can be further expanded by offering online pay statements that can be available 24/7.

· Your business can be more secure. Lost or stolen checks are a common source of identity theft and fraud. Direct deposit eliminates the risk of stolen checks and forged signatures. Electronic deposits can increase the protection of both employee's personal information and the employer's account information.

IMPORTANCE / BENEFITS TO EMPLOYEES

The benefits of direct deposit for employees are far-reaching and can even have a positive impact on their overall health and wellness. Your employees will be pleased that:

· They don't have to go somewhere to cash their checks. Employees no longer have to wait in line or hassle with crowds to deposit or cash their checks. During public health emergencies, they also don’t have to risk potential exposure to illness in a public place such as a bank or other check-cashing location.

· They don't have to be in the office to get paid. If an employee works remotely, is out of town, or takes a sick day, they can be assured the deposit will be made. Moreover, that money can be made immediately accessible.

· They don't need to worry about asking to re-issue lost or stolen checks. With no paper check, direct deposit eliminates wages being stolen or lost. It also removes the risk of a check getting damaged or delayed in the mail.

· They can control where their money goes. Having control over where the paycheck goes is another way direct deposit provides flexibility and convenience for employees. They can direct funds to go toward a savings account, emergency funds, or other financial goal.

CREATIVE METHODS UDED BY PAYROLL PROFESSIONALS ARE

· Payroll Factoring. Payroll factoring is where you sell your accounts receivable to a bank or lending agent in exchange for a cash advance that will then be used to pay your employees. The advantage is that you can quickly obtain money for payroll, but the lending company will only give you a percentage of the amount that you were owed on your invoices.

· Negotiate With Suppliers. Ask if your suppliers will provide a discount if you pay your bill early. Even a 1% discount can add up quickly.

· Cut Back on the Inventory. Only focus on inventory that will sell quickly. Unsold inventory is a drain on your business.

· Expand Your Market. Are there new markets, either geographically or demographically, that your business can enter? Are there new products or services that you can offer? Look for new market opportunities to help your business grow.