The costs associated with payroll can really add up. From payroll materials, like paper checks, to the time dedicated to executing payroll, there are plenty of necessary expenses. But a company only has a handful of options to reduce fees.
Technology advances in all aspects of business - human resources is no exception. Though it is challenging to learn new processes, adapting to new technology can save your organization time and money.
While some smaller companies with salaried staff and relatively simple tax obligations may save money by handling payroll internally, mid to large-sized companies could save more by outsourcing payroll to a third-party company.
Third-party companies tend to keep up with changes in tax rules, which can help your business avoid unnecessary IRS penalties from misfiling. Third-party companies may also help improve your record keeping and filing system in the event of a state or federal audit, which can be a laborious process.
All in all, outsourcing payroll is meant to create a simpler means of paying your employees. If your operations team, including payroll, operates skeletally, outsourcing payroll helps eliminate excess time spent on administrative duties.
Direct deposit saves both time and money. From a productivity perspective, NFIB estimates each paper check a small company writes costs about $1. Lost employee time for depositing checks is estimated at about $2 per employee. Thus, this makes the total cost per written paper check approximately $3.
Bank of America estimates the total cost of a paper check, including materials used to process a paper check, at around $4 to upwards of $20. This includes the price of the check and shipping, plus the time employees spend writing, mailing, collecting and reconciling the check.
By committing to direct deposit, a company can save by:
If you offer direct deposit but have a low participation rate, have you offered incentives to employees to join the program?
How often do you pay your employees? There is a fragile balance between what is cost-effective for a company and what promotes financial wellness for employees. In reality, a short payroll turnaround places considerable strain on your administrative team and is expensive to maintain.
On the flipside, the longer between paychecks can put financial strain on your employees.
If you operate on a weekly or bi-weekly pay schedule, then consider adding a benefit like DailyPay to your employee benefits and extend your payroll to semi-monthly.
DailyPay is a new HR technology that allows employees to access their earned but unpaid wages as often as they would like - daily, even. The service is non-disruptive to your current payroll process and there is no cost for your company to offer our service. DailyPay provides all of the funding and technology. DailyPay only works through direct deposit, which can help boost your enrollment rate and lower your payroll expenses.