A new year, a new push for direct deposit
January 12, 2010 by Christian SchappelPosted in: Communication, In this week's e-newsletter - benefits, Latest News & Views, Management, Money, Pay and benefits
Despite the benefits of direct deposit, some workers are still wary of signing up for the pay option. These are the employees you want to work on right now.
Why? The beginning of a new year is typically when even the most reluctant staffers are receptive to change.
To help boost participation, pass along these facts about direct deposit to skeptical workers:
- They get their money faster. Employees enrolled in direct deposit get their checks in their accounts faster — usually around 12 hours faster. That’s a very convincing point for employees who are living paycheck to paycheck.
- They get to save without thinking about it. Many employees want to put money aside, but simply don’t have the discipline to do it themselves. With direct deposit, employees can elect to automatically put a set amount of money into a savings account each pay period.
To convince its employees direct deposit was a smart idea, a southeastern manufacturing company presented it’s workers with real-life examples of how the system would benefit them personally.
Example: During a hurricane in the area, some of its employees weren’t able to get their paper checks on time — and direct deposit would prevent that problem from happening again.
What are some ways you convinced employees to switch to direct deposit? Let us know in the Comments Box below.
Tags: direct deposit, participation, pay option, savings
January 12th, 2010 at 11:34 am
Why would I ever try to convince my employees to switch? I happen to respect my employees. And I respect them enough to encourage them to continue to receive their pay in the form that makes the most sense to them. And your “arguments” supporting the move to direct deposit—what think tank fed that stuff to you??? Wow–12 hours faster into their account. Whoop-de-freakin’-do!
Like anyone living paycheck to paycheck is going to live or die because of a 12-hour difference in making their deposit. And what’s all the stuff about saving without thinking about it? Sounds like you don’t want employees to think. If mine aren’t thinking, my productivity goes in the crapper and my profits do the same. Not to mention, if they aren’t thinking about saving anyway, the pay would still go into the checking account and be spent immediately. After all, you’ve already suggested they’re living paycheck to paycheck. People living paycheck to paycheck don’t save; they spend.
January 12th, 2010 at 1:44 pm
Wow. Bob seems to have some anger management issues. Anyways…Our checks get issued by our coprorate office in another state and shipped overnight to our office for payday. If, for example, there is a snow storm and the office is closed, employess cannot get their money until the office repopens and the checks are delivered. And if this was a Friday, they will have to wait until the following Monday. Now, if you are living paycheck to paycheck, those 3 days make a big difference. I always present this scenario to employees to encourage them to sign up. So, if FedEx loses the checks and direct deposit receipts (which has happened), at least the money has been put into your account and the employee does not have to wait for the corporate office to cancel, reissue and resend the new checks.
January 13th, 2010 at 7:19 am
Happy employees are productive employees. Their focus will be on doing their job, not on grousing about company policies that cause them hardship. Unhappy employees are not productive. I want my employees to be happy because that means they will be productive. They will be successful and so will my company. We do payroll in-house, so we don’t have the delivery issue Linda describes. Read the beginning of the article again. “These are the employees you want to work on right now.” Clearly, the writer believes that the business owner and/or HR knows best, and that it’s their job to convince the poor, dumb employee who wants a paper check of the error of his/her ways. It’s that kind of arrogant attitude that gives businesses a bad name. My employees are all different. Most of mine don’t like direct deposit. Many of them maintain accounts at two or three banks or credit unions. They don’t want the same amount of money put in each account each pay period; their deposit decisions change every time. If it costs a me a couple bucks to keep ‘em happy so they can do with their money as they see fit, so be it. I get to have happy, productive workers, instead of people who spend their time complaining to one another about what the company won’t let them do.
January 13th, 2010 at 9:09 pm
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January 14th, 2010 at 11:35 am
This is an issue of convenience for the employer, HR and Payroll Dept. I believe that the employee has the right to determine how he or she wants to receive their pay. After all, they’ve earned it; they have the right to receive it in whichever venue they choose. In the age of identity theft, I have many employees who trust no one with their personal information. I honor their wishes. It may be a little more work to issue checks for these employees, but if they’re happy then I can depend on them to perform their jobs in a more up-beat manner. In the long run, who cares how they receive their pay as long as they’re doing their jobs.
January 14th, 2010 at 12:28 pm
I’m on Linda’s side in this one. We have employees all over the U.S. but the checks come from corporate in Colorado. UPS misdirected a shipment of checks two weeks ago and those who don’t have direct deposit got their checks 3 days late — yes, it caused some hardship. Direct deposit is safer — and faster — than sending checks all over the country. We get complaints that employees don’t get their checks quickly enough, not that we force them into direct deposit.
January 14th, 2010 at 12:42 pm
It’s just an option Bob, not a requirement. Options usually are good. Direct deposit saves my company money (we’re a nonprofit with more than 500 employees), but no one has to sign up for it. I can’t always get to the bank during banking hours to cash a check, but when it’s deposited in my account with direct deposit I can make a withdrawl from an ATM and send out bill payments without needing to get to the bank. I’m living paycheck to paycheck and the tiny amount (7 bucks) I put into savings every check turns into $182 a year, and I get to do something fun. Please take a deep breath Bob, if your employees sense you’re this upset over something so trivial they might not be so happy.
January 14th, 2010 at 1:43 pm
I work for a PEO and we offer payroll services to other companies. We have several clients who offer Direct deposit or a Cash Card to their employees. These are clients who are trying to go paperless as much as possible; with these options, we can e-mail their payroll reports and all employees on direct deposit have access to view their account via our website. Then the employee has the option to print their stub only if they need it for a specific purpose. Not to mention the employees have full access to all their stubs, their benefit selections, and all other deductions. The client has now eliminated their delivery fee, thus saving the company money and we can all cut back on so much paper useage.
The employees who have taken the cash card option have their funds directly deposited to the card account, and the money goes in the same night as regular direct deposit. The card has a VISA logo so the EE can do their food shopping or get gas with their cash card, they can even pay their bills online with the card, it’s a great alternative to a paper check. It’s also good for those employees who don’t have a credit card or any other means then carrying around cash.
I know, I know, what about the employees who don’t have a computer or even have computer access – well we have still have plenty of clients with direct deposit and the paper check option!
January 14th, 2010 at 3:24 pm
Yes, Gary, it is an option. But as I pointed out previously, read the second sentence in the article again. “These are the employees you want to work on.” That’s not offering an option; that’s a strong-arm coercement. I’m glad no one is required to sign up for direct deposit at your organization. And I’ve got no beef with you doing so if that’s what works for you.
Let me make it clear, options are fine. I don’t care if direct deposit is an option. It’s the condescending tone of the article that makes me mad–the idea that anyone who wouldn’t immediately sign up for direct deposit is somehow lacking in intellect and must be shown the error of his/her ways. I resent it when I see the government, major retailers, and other businesses mandating that wages by paid only by direct deposit. It makes us all look autocratic and uncaring.
Julia, thanks for your validation of what I’ve been saying. We may be in the minority, but we’re doing the right thing by our employees.
January 14th, 2010 at 3:46 pm
Bob, we’re probably far more in agreement than I initially recognized. I was thinking of our company where no one gets strongarmed into direct deposit, and most of our employees work at least 30 minutes from where our main office is located, which distributes checks. Our companies are obviously different, but I am pretty sure we both just want people doing their jobs with a positive attitude and feeling valued. You’re probably a lot better to work for than I gave you credit for. Gary
January 14th, 2010 at 3:53 pm
It is very simple, all direct deposit. The company I work with does not offer checks, only direct deposit. Payroll is done inhouse, the employees may select as many accounts from as many different banks as they wish for monies to be deposited into.
Meaning checks are never lost and payroll can be done remotely and stubs mailed from anywhere in the world.
The only issue with this that i have run into in the last 4 years, is when the state decides to attack an employees bank account for childsupport owed. Since his pay was direct deposit the government took his pay “ALL OF IT” not just the percent required and held for child support.
January 14th, 2010 at 4:15 pm
I will only say this. In our company of 300 people we have ONE person who doesn’t have direct deposit. He insists that he doesn’t want direct deposit because the bank has it out for him and will steal all his money if he puts it in there.
I googled it…fear of financial institutions: Bancophobia
January 14th, 2010 at 4:26 pm
Here are a few of our ideas that we use to encourage direct deposit.
Direct Deposit is simple.
Once you have signed up for Direct Deposit, you don’t have to go to the bank to deposit checks.
Your money is automatically deposited into your account on time, every time and you don’t have to be at work – or even in town! Both of these are huge time savers
Direct Deposit is safe.
Direct Deposit payments never get lost.
Direct Deposit is confidential. Money is transferred electronically and passes through fewer hands than a check.
Direct Deposit is smart.
Direct Deposit puts you in charge of your money. Financial planners recommend Direct Deposit as one step towards gaining control of your finances.
With Direct Deposit, you decide how to divide your pay among your accounts and it will be done automatically.
January 14th, 2010 at 4:30 pm
Bancophobia? Perhaps. Then again, this link provides a pretty sobering perspective:
http://www.webcpa.com/news/Direct-Depositors-Beware-52823-1.html
January 15th, 2010 at 8:43 am
While I understand everyone’s view point, I would like to add one more incentive for direct deposit, (we do not make it mandatory Bob). Several times, especially around the holidays, our employees get mugged, and severly beat up, as they walk out of the bank with their cashed checks. They even end up with stitches and lose out on work to recouperate, thus a loss in productivity.
January 15th, 2010 at 11:38 am
We stopped offering direct deposit temporarily. We had quite a few employees with Washington Mutual. When the bank was taken over, it took some of our employees as long as 5-6 weeks to get things straightened out. Several switched their accounts to West Sound Bank….which failed 6 months later. Again, taking weeks to get things straightened out. These are all construction workers living paycheck to paycheck. As a result approx 30% of our work force cannot even get a bank account because of what’s happened to their credit scores….not even at the bank the corporate accounts are in. We figure we’ll try again in about a year. There’s no cost or time difference to us since it’s all in-house.
January 15th, 2010 at 9:47 pm
One issue I have yet to see mentioned are those employees who belong to no financial institution at all. I don’t understand it (bank accounts are free, or at least close to it) but I work with a few people who do not have a bank account. The paper check option is good for them because they can cash their checks at a convenience/party store pending the amount.
Personally, I have direct deposit. No hassles, and identity still intact. Besides, how in the am I supposed to get to the bank to cash my checks when it opens a half hour after I start work and closes a half hour before I’m off? The 8-11 time slot on Saturdays? Hold on banks, there’s no need to cater to the other 90% of the population.
Kevin’s bottom line? Options are good, no matter how, a’hem, “stupid” peoples choices are.
January 18th, 2010 at 4:54 pm
If I get an out of state check, there is a 10 working day hold on it by my bank. It does not matter if it’s a payroll check, a 401k loan check or any other check. Ten days; I oversee payroll but still pretty much live check to check. Plus, I do not like carrying that much cash around or even asking for that much cash in line at my bank. I have two different banks; they both have the same policy. Luckily, I live in the same state so most of my checks (including payroll) are only subject to a 2 day hold. I have successfully persuaded a few employees to switch to direct deposit, especially our 4 day a week line workers who are not here on payday. It saves them a trip to the bank; the money is in their account by 7 a.m. on payroll day vs. fighting traffic, winter weather, loading the kids in the car, etc.
January 18th, 2010 at 7:54 pm
I love my direct deposit and don’t ever want to go back to paper checks. Like Kevin J – I am at work when the banks are open. My money is in my bank and accessible at 8am on payday. If my check was mailed it would be at least a day later that I would drop it in the night deposit, 2 more days before I could get the money back out because of bank policy to wait for it to clear. Never again!
January 20th, 2010 at 12:47 pm
We are a PEO that lets our clients choose what is best for their employees. We offer Direct Deposit like most companies. But, we also give all of our clients the ability to have checks printed and mailed out. Saving money is always great from an administrative stand point for us but providing the options for our clients is most important to us.
January 20th, 2010 at 3:24 pm
wow this is funny stuff! who would have thought Direct Deposit would be such a HOT TOPIC! Thanks folks, made my day!
on a serious note…It is more convient for Direct Deposit…but it isn’t the end of the world if an employee doesn’t have it. And if an employee wants to “gamble” that their check might get “lost” in the delivery or whatever…so be it. I work in Contruction…which is a trickey field to do payroll, all differnt dept. codes, and rates due to prevailing wage requirements, etc. No two checks are ever the same. Unfortunately, errors happen, try fixing a check that is direct deposit…Oh man talk about a headache!
January 22nd, 2010 at 10:49 am
I agree that direct deposit is convenient and good for most people. In California, however, we can only encourage, not make it mandatory, so we have a few people who still get checks. They are the ones who want their check early if they are off on payday, which is whole ‘nother problem. Anyway, someone without a bank account can cash it for free only at our corporate bank. Anyplace else charges $5. The law requires that persons be able to cash the check for free, which means we have been subject to reimburseing check cashing fees. Most of the people who don’t want direct deposit have told us they don’t want their spouses to know what they make! (what about signing the income tax return?!) If you want to really have fun, do business in California.
January 26th, 2010 at 3:57 pm
My employer doesn’t allow for a direct deposit option. Their story changes constantly on why we “can’t” have direct deposit. The most common defense is that their bank will only allow them to have direct deposit with 100% participation and some employees don’t want the bank to have their money (hmm… seems we can’t trust banks anymore…) We don’t buy it because the bank website specifically lists direct deposits with no participation requirements. I don’t think my employer is being honest with us.
February 15th, 2010 at 9:45 am
I am the H.R. clerk for a small janitorial company and many of our employees don’t have a bank account for one reason or another so, obviously, they have no other option than to receive a live check. Far be it from me to convince them to open an account just so they can have direct deposit.
On the flip side, I always urge that if an employee has a bank account, the best option is direct deposit because of the obvious benefits – quick access to their pay, not worrying about a check getting lost in the mail, etc. Also, we offer the option to have the pay stubs e-mailed to the employee (for those who have an e-mail account) so they can get a paperless pay stub.
February 25th, 2010 at 8:44 am
Bob, the webcpa link is an interesting anecdote, but it’s hardly relevant. At our facility we ‘pre-note’ all direct deposit requests. In other words, we do a dry run of the routing and account numbers with no money attached to make sure that we have correctly done the data entry before any money is actually sent to the bank. If an error comes back, nobody has lost any money and we correct the error and do another dry run. We do not enforce direct deposit, nor do we ’strong arm’ anyone to sign up for it, yet we have 98% participation. We see it as a benefit to our employees and most are grateful for it.