Some employers issue physical paychecks to their employees, whether on a bi-weekly or monthly basis. However, more and more employers have begun using direct deposits to pay their employees. One of the most attractive characteristics of direct deposits is that they eliminate the risk of losing a paycheck or having it damaged or stolen. For this reason, direct deposits have become increasingly popular as a method of payment with both large and small businesses.
Pros and Cons of Using Direct Deposit
There are a number of additional advantages to using direct deposits over paper paychecks, including that:
Employees do not have to take checks to the bank to have them cashed, but can access their funds even before the bank opens;
Employees do not need to wait for a check to arrive in the mail, but can receive their payment immediately;
Employees have flexibility if they decide to switch accounts or financial institutions;
No one but the employee has access to personal information that is usually printed on a check, including an employee’s address and telephone number; and
Direct deposits can be used for regularly scheduled payments, including payroll, bonuses, commissions, travel expense reimbursements, benefits issued by the federal or state governments, pensions, dividends, and even tax refunds.
There are, admittedly, a few downsides to direct deposits, including the following:
Employees are required to give employers their bank account information;
If an employee does not qualify for a bank account, he or she will not be able to receive a direct deposit; and
Banks may assess charges to employees who don’t manage funds appropriately.
Finally, employers can require employees to use direct deposit, although in Oklahoma it is unlawful for employers to mandate that workers use a specific financial institution.
How an Experienced Financial Management Team Can Help Your Business
Using direct deposit can significantly simplify the payroll process for both employers and employees, so if you live in Oklahoma City, Tulsa, or Lawton and are interested in setting up a direct deposit program for your business or have questions about tax planning, accounting, or bookkeeping, please contact our financial management team at CORE. Members of our team can be reached at our Oklahoma City office at 405-288-1207, while those at our Tulsa office can be contacted at 918-209-3441. If you live in or near Lawton and have questions or concerns about using direct deposit at your own business, please call us at 580-353-2376 to schedule a consultation.