Would you like to increase your company’s productivity while benefiting your employees? Direct Deposit can allow your company to save time and money while providing an additional employee benefit.
GETTING STARTEDIt’s easy! All payees, including stockholders, retirees, as well as current employees simply complete an enrollment form authorizing Direct Deposit into their savings or checking account. The account information is entered into our software, which is retained for all future payments. The amount to be paid is entered and funds are posted to the designated account electronically. A statement providing similar information that would be provided on the check stub is produced by the software and made available to the payee.
BENEFITSFrom small to large companies, Direct Deposit provides many benefits for both the company and employee, including reduced data entry and handling costs, and creates many operational efficiencies. It’s safer for your employees and smart savings for your company - most often at a fraction of the cost of printing and distributing paper checks - while considered by the employees to be a company-provided benefit.
Small businesses benefit equally. Even businesses with only a few employees stand to enjoy considerable value. As small business owners it is often difficult to provide some of the same benefits to employees as do larger corporations. How about a benefit that when polled, 97% of employees are happy with and, at the same time, saves your company time and money? Lower your processing costs, speed up cash flow and simplify reconciliation, while also offering an employee incentive. It’s easy to set up, simple to operate, and has many additional benefits for your business.
DIRECT DEPOSIT COST ANALYSIS
According to this comparison of the costs of paper checks vs. Direct Deposit payments, a company with 100 employees can save nearly $5,800 per year by switching to Direct Deposit, whereas a large business of 30,000 employees can realize over $1.6 million in annual cost savings.
Cost savings, along with the other benefits of electronic payments, are applicable to businesses of all sizes. Even if your business has fewer than 10 employees, you can realize substantial cost savings by switching to Direct Deposit.
The figures shown here assume that Direct Deposit payroll stubs are printed and delivered in the same manner as a paycheck; however, secure electronic distribution of pay stubs can provide additional cost savings.
Small Business Cost Analysis:
100 Employees Paid Twice per Month
| |
Paper Check |
Direct Deposit |
Cost Savings
With Direct Deposit
|
| Processing |
$0.865 |
$0.513 |
$0.352 |
| Employee lost time
(per payment)
|
$2.064 |
$0.000 |
$2.064 |
| Total cost per payment |
$2.928 |
$0.513 |
$2.415 |
| Total cost per month |
$585.60 |
$102.60 |
$483.00 |
| Total cost per year |
$7,027.20 |
$1,231.20 |
$5,796.00 |
Source: NACHA/Tinucci Study, June 2003
Large Business Cost Analysis:
30,000 Employees Paid Twice per Month
| |
Paper Check |
Direct Deposit |
Cost Savings
With Direct Deposit
|
| Processing |
$0.269 |
$0.082 |
$0.187 |
| Employee lost time
(per payment)
|
$2.083 |
$0.000 |
$2.083 |
| Total cost per payment |
$2.352 |
$0.082 |
$2.270 |
| Total cost per month |
$141,120 |
$4,920 |
$136,220 |
| Total cost per year |
$1,693,440 |
$59,040 |
$1,634,640 |
Source: NACHA/Tinucci Study, June 2003
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| What People are saying
“We cut 30 percent from our payroll costs (by using) Direct Deposit and gave our employees a valuable new benefit. The first year Direct Deposit saved us $47,073.00 … Cutting costs while adding a new employee benefit. How can you beat it?”
-City of Lubbock, Texas
(1,920 employees)
“Direct Deposit is a win-win for employees and companies. Two years ago, a severe ice storm in New Jersey literally froze the mail service! This affected employees who received traditional paper paychecks. Our payroll department had to stop payment and reissue these checks – a major inconvenience.
Our Direct Deposit users had their money on time as scheduled. Direct Deposit is a reliable and safe method for payroll distribution.”
-Bristol-Myers Squibb Co.
Stamford, CT
(54,000 employees
“Direct Deposit is the single best time management tool I have. Our valuable work time is not consumed with payroll-related activities, going to the bank to cash paychecks or running other errands that revolve around payday. Direct Deposit does the work for us.”
-Washington Office on Africa,
Washington, D.C.
(4 employees)
As with ARC, checks would be converted in bulk without the need to get customer approval on each transaction. Rather, back-office conversion would adopt ARC's so-called notification-equals-authorization rule, in which periodic statements tell consumers what will happen to their checks and offer an opt-out. With back-office conversion, merchants might be able to do this by posting a sign at the checkout counter. Also, they would need to equip only one location in the store and would need to train far fewer personnel. Payments would settle the next day, as with other ACH transactions, but business checks would still be excluded.
“Direct Deposit cuts (our) costs from 21 cents per paycheck to 4.5 cents. With 7,600 – or just over half – of Stanford’s employees on Direct Deposit, that means a savings to the university of $1,263 each payday.”
-Stanford University,
Stanford, CA
(14,558 employees)
“We have found Direct Deposit to be highly successful as an accurate, efficient way of paying our employees. The benefits are by far greater than the challenges of reconciling and reissuing lost or stolen checks and the employees can count on a safe means of payment. Our participation has grown to approximately 77 percent. That speaks for itself.”
-B. Braun Medical Inc.
Bethlehem, PA
This material reproduced from www.electronicpayments.org with the permission of NACHA.
Copyright ©2006 NACHA.
All rights reserved.
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