To send or receive payments, we have several options like cash, cheques or electronic payments. Now a day’s many organizations prefer to use electronic payments. Direct deposit is an electronic method of paying or crediting from one bank account to the other chosen bank account. Direct deposits offer a convenient, secure and reliable alternative to the traditional paper cheque.
How does bank direct deposits work in payroll?
Firstly, the employer must establish a bank account for its payroll activities. The employee submits a copy of his/her bank account information to the employer to enter into the payroll management software. The employer automatically transmits the amount into its bank account on the payday. The employee will receive a pay slip with all the basic information, earnings/allowances, deductions and taxes from the employer after the salary has been credited into the employee bank account.
Reasons to switch to the bank direct deposits:
- Payments are deposited automatically among designated employee accounts: The payments are added automatically to employee account without any action required on your part. Employee payments are deposited electronically into the employer’s bank account and then transferred to each designated employee account.
- Reduced chance of losing cheque or having them stolen: Direct deposit eliminates the option for losing a cheque. The funds are transferred electronically into employees’ bank accounts and also protect sensitive data. Employers still provide employee pay stub.
- No need to spend time visiting banks or ATMs to deposit cheque: Employees don’t have to wait in line at banks to deposit a paper cheque. Our Payroll management system is providing mobile banking app/Online banking to the employees so that they can simply log in and check whether the deposit has been credited to their account.
- Access to the funds right away on payday: With the direct deposit option in HR Payroll software, the employees get paid sooner. The funds are available right away on the payday and there’s no need to deposit the cheque and wait for it to get cleared.
- Maintains an electronic record: It maintains a record of the payment in the payroll process software. Direct deposit statements show the total amount for the pay period. If necessary, you can examine each transaction in the direct deposit log. You don’t need to manually write the details about the payment.
- Reduces the usage of paperwork: Direct deposit is a paperless electronic process. Reducing the usage of paperwork helps in limiting the impact of the business on the environment and also reduces the carbon footprint.
- Support transfers to all bank accounts and payouts to and from other countries: Employer can send payment to any savings or current or checking account.