Imagine you’re an employee at a large corporation. Every pay day, you need to walk across the building to human resources to get your paycheck. Then, after work, you need to make a trip to the bank to deposit your check. Now, think of all the things you do and places you go between the hours of 8am and 5pm. Chances are, you have a lot going on during the day. That means that there are many opportunities to misplace your paycheck or forget about where you put it. Even if you’re on top of things, there’s still a chance you could lose it. There’s a simple solution to this problem: direct deposit.

If you’re a business owner, or even an employee, chances are you’ve heard about direct deposit. According to the National Federation of Independent Businesses, 60% of employees already receive their paychecks through direct deposit. More and more employers are choosing direct deposit as their method of paying employees. But why are so many people choosing to use direct deposit and what are the benefits?

What is direct deposit?

Direct deposit automatically places an employee’s paycheck into their checking, savings or money market account directly from the employer’s account. Direct deposit is a secure option for employers and is convenient for employees. The ACH, or Automatic Clearing House, is the electronic network for US financial transactions. The ACH processes direct deposit as well as other credit transfers such as vendor payments.

What are the benefits of direct deposit?

Direct deposit is convenient for both the employee and the employer. There are many benefits to offering direct deposit, such as:

Employee convenience:
Today, most banking is done online, and there are very few reasons why someone would need to go to the bank. With traditional paychecks, employees will need to make a special trip to the bank in order to receive their money. However, with direct deposit, there’s no need for employees to go to the bank because their paycheck is deposited directly into their account. Additionally, if a regular payday occurs on a holiday, employers can process payroll earlier and have their payday fall on a different day. If employees are on vacation or if they’re taking a sick day, they’ll still be able to get paid via direct deposit.

Paychecks can be allocated into multiple accounts: Direct deposit allows employers to deposit a paycheck into multiple accounts. Having control over where a paycheck goes provides flexibility and convenience for employees. This allows employees to have a portion of their paycheck go directly into a savings or retirement account while the rest of their paycheck goes into their checking account.



Cost savings: 
Offering direct deposit saves money for employers over time. The time spent on payroll is reduced when direct deposit is offered. There’s no need to write and fold checks, stuff them into envelopes and make sure they get delivered to every employee. Direct deposit takes out the extra work and makes payroll processing simple and efficient.

Benefits for employers

  • Reduced risk of fraud or stolen checks
  • Greater control over payroll and additional payroll expenses
  • Timely payment of paychecks, even when employees aren’t in the office
  • Reduced time spent on bookkeeping

Benefits for employees

  • Guarantee that they’ll be paid on time
  • Less time for paychecks to clear
  • No possibility of losing a check or it being stolen
  • Many banks offer free checking services to employees who will be paid via direct deposit
  • No cost to employees for using direct deposit

Offering direct deposit is extremely beneficial and convenient for employees, but it’s also beneficial to employers. If you’re not already using direct deposit, your payroll service should be able to help you get it set up.

Learn more about saving money on payroll services with ADP and Windfall:

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