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Nov 29, 2023 Matt Venuto

Mastering Paperless Payroll: Direct Deposit and Pay Card 101

Mastering Paperless Payroll: Direct Deposit and Pay Card 101

Are you still managing payroll and processing paper paychecks manually? If so, you’re wasting upwards of five hours a week on these tasks — time you could spend building your business or managing your staff. 

If you and your staff are tired of wasting time and resources processing manual checks, handling returned mail due to miscommunicated address changes, and fielding calls from frustrated employees waiting on paychecks that haven’t yet arrived due to delays with the US Postal Service, you aren’t alone. If you’re ready to put these headaches behind you, you will want to explore paperless payroll, direct deposit, and pay cards.  

Are you considering the switch to paperless payroll? This article outlines its ins and outs and the specific advantages of each that might reveal the payroll choice that best suits your small business. 

Paperless Payroll: The Ins and Outs

Before diving into paperless payroll details, let’s establish some baseline information. First and foremost, what is paperless payroll? Paperless payroll involves transitioning away from cumbersome, manual checks and processes to automated digital solutions. 

When you have paperless payroll, you can automatically pull hours from time clocks or tracking software into the payroll system and calculate taxes and deductions seamlessly every pay period. The paperless solution of direct deposit also lets you instantly deliver funds to employee accounts on payday without the hassle of printed checks. These automated workflows free up staff time previously devoted to payroll and prevent costly errors impacting employee satisfaction and regulatory compliance.

Another benefit of going paperless? It’s faster and more reliable than paper checks. Anyone who has experienced delays receiving printed checks in the mail knows the headaches it can cause. Sixty-one percent of working adults live paycheck to paycheck, relying on every cent to cover basic expenses. With direct deposit or pay cards, funds are instantly accessible on payday, no matter what. 

Despite the advantages, transitioning to paperless payroll can still feel overwhelming. But with the right payroll experts working alongside you, it’s simple. Payroll specialists can ease the migration by assessing your current workflows, outlining best practices for automation, and recommending cost-saving tools tailored to your business’s needs. Payroll specialists will smoothly onboard your employees and deliver world-class support before, during, and after your transition to paperless payroll.

Let’s examine some of the critical details you need to know to effectively transition to a paperless payroll solution.

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The Downsides of Traditional Payroll Methods 

Paperless payroll solves many drawbacks that bog down companies using outdated manual processes. Let’s examine a few of the pitfalls of payroll you can avoid when you switch to a paperless process.

  1. Manual Data Entry and Check Processing: Human error from manual number crunching leads to incorrect paycheck amounts, missed deadlines, and compliance issues down the road. Printing and distributing paper checks rack up costs for check stock, postage, and administrative staff hours. Mailing physical checks also introduces security risks of stolen documents and delays in receiving funds. Paperless payroll solves these challenges for your business and your staff. 
  2. Lack of Visibility into Pay Information: In traditional payroll processes, your employees don’t receive detailed payroll breakdowns — aside from their paystub — on a regular basis. Paperless payroll solves this with transparent employee portals. Without automation, payroll can't integrate smoothly with other platforms to sync data tied to your accounting software, HR services, or time and attendance systems. Paperless payroll gives your employees a closer look into their individual payroll data paycheck-by-paycheck and helps business owners like you avoid redundant processes.
  3. Lack of Remote Support: Supporting a mobile and global remote workforce is far more complicated when your business is tied to printed checks. And environmentally–we’re all paying the price for it. US-based offices alone produce an estimated 31.5 million tons of paper waste annually. 

Direct Deposit Basics and Benefits 

We’ve covered many ways paperless payroll and direct deposit eliminate traditional payroll struggles, but that’s not all direct deposit can do for your business. When implemented effectively, direct deposit can create new efficiencies. 

Direct deposit is a seamless facilitator between your payroll provider, bank, and employee accounts. For employers, direct deposit massively cuts administrative workload compared to physical check distribution. And it provides your employees with guaranteed on-time delivery of wages regardless of weather or other delivery-based delays.

Let’s envision a scenario and consider how this might impact employees at small businesses like local restaurants:

For example, Johnny got his paper check after his waiter shift ended last Friday at lunch. It snowed that day, so he couldn’t reach the bank before closing. His bank also doesn’t have a mobile deposit option, so Johnny must wait until Monday—at the earliest–to access his paycheck. Johnny’s regular payments for utilities, daycare, and other obligations are late—and now he has to face the late fees that come with them. 

Then, Johnny's employer switches to direct deposit. Johnny now has instant access to his wages every Friday morning before he’s even poured a coffee. It’s easy to address weekend expenses, bills, and incidentals. Now, he has complete visibility into his payroll data every pay period through the restaurant's online portal rather than squinting at a pay stub. Johnny’s payday challenges are behind him, and, as a result, he’s more likely to stay with the restaurant. (In fact, statistics show that employees are 13% more likely to stay with their current employer when they’re happy with their pay and benefits setup). 

Direct deposit puts your employees at ease–knowing they can count on their paycheck to come on time, every time. You’ll save on administrative fees and paper costs–and likely reduce employee turnover.

Pay Cards Basics and Benefits 

But what about your staff members who don’t have access to a checking account?

Maybe direct deposit is the most popular type of paperless payroll solution–but it isn’t the right solution for every employee. 

Enter: Pay cards!

Payroll pay cards offer similar advantages to direct deposit for your employees. Funds are loaded automatically, but rather than loading into a bank account, funds are transferred onto prepaid debit cards provided by the employer. This solution works well for your employees without bank accounts. The prepaid pay card an employee receives works just like a debit card, and workers can use their pay card anywhere debit is accepted (and without check cashing fees.) 

Pay cards are pretty easy to distribute logistics–and eliminate check processing fees, late payroll issues from postal delays, and other overheads. 

Master Paperless Payroll With the Right Payroll Partner 

Paperless payroll may be an advantage to your business. But it’s a lot to digest and understand (and may incur new administrative challenges). There’s lots to consider: Should you choose direct deposit or pay cards? Should I ask my employees if they have a bank account or need a pay card instead? How long does the implementation process take? How do I notify my employees that the process is changing? 

Don’t tackle this decision alone. Partner with a local expert to guide you through the payroll transition process

At ConnectPay, our dedicated Payroll Specialists are extensions of your team–we’ll assess current workflows, map optimum solutions around direct deposit or pay cards, and seamlessly onboard your employees.

Want to learn more about how ConnectPay and our experts can help? Schedule your free Payroll Tax and Compliance Review today.

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Published by Matt Venuto November 29, 2023