Small business owners today have enough headaches without having to worry about printing and delivering paychecks. Thankfully, it’s never been easier for them to pay employees electronically using payroll direct deposit software. These solutions can reduce costs associated with labor, paper supplies and human errors. Electronic pay is also attractive to employees and could improve workforce morale.
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What is direct deposit software?
Direct deposit software is technology that electronically transfers funds from an employer’s bank account to an employee’s bank account each scheduled payday. It’s commonly available as part of a payroll service package, which may include related paperless features, like paycards and electronic statements. When necessary, most payroll solutions can also generate traditional paychecks and pay stubs.
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Compare PackagesWhat are the essential features of direct deposit software?
Shifting from paychecks to electronic pay can be a win-win situation for employers and employees alike. To truly modernize the payment process, however, direct deposit software may need the following features:
50-state compliance
Reputable payroll providers will monitor changes in wage payment laws nationwide and advise clients accordingly. Some may also provide standard pay templates and direct deposit forms to help further support compliance.
Security measures
Payroll providers who take data security seriously monitor all electronic transactions and use comprehensive controls to detect, investigate and respond to anomalies and incidents. Fraud prevention programs add another layer of protection for funds and personally identifiable information.
Integrations
Integrating direct deposit software with a company’s enterprise resource planning (ERP) solution can help ensure that data and payment information are transferred smoothly. Plug-and-play integrations may be available, depending on the provider.
Electronic statements
Direct deposit software sometimes has a mobile app where employees can conveniently access pay statements by pay period. They may also be able to download and print their annual Form W-2, Wage and Tax Statement.
Advantages of direct deposit for employers
It’s easier to pay employees via direct deposit than a paycheck, but that’s just one reason employers should consider electronic payments where permissible. Other benefits of direct deposit include the following:
- Reduced costs – Eliminating printing and mailing costs for paper checks and other statements could save businesses money.
- Consistent experiences – Active and terminated employee pay information (pay statements, Form W-2, garnishments, etc.) is available in one place.
- Decreased risk – By combining security teams and technology, payroll providers help keep employer and employee data safe.
Advantages of direct deposit for employees
Employees desire quick, secure access to their earned wages. They also want payment methods that are personalized to their individual needs. Electronic pay can meet these demands and so much more. Here are just a few of the advantages of payroll software with direct deposit that employees love:
- Security – Direct deposits cannot be lost and are less prone to theft than paper checks.
- Speed – Money deposited to an employee's account is available almost immediately and sometimes the day before payday.
- Convenience – Employees no longer need to travel to a bank or ATM to deposit a check.
- Financial control – Compensation can automatically be disbursed between multiple accounts (checking and savings).
- Reliability – Inclement weather or other potential disruptions usually do not affect electronic payments.
How to get the most from direct deposit payroll software
It’s not enough to simply offer direct deposit. Employees must know that it’s available and understand what’s in it for them. A communications plan that follows these steps can help get the message across and improve direct deposit adoption:
- Evaluate the status quo
Pull data on how many employees currently use direct deposit. Those who are not enrolled will be the target of the communications campaign. It may also help to review onboarding materials. If direct deposit messaging is missing, it should be added so new hires are aware of the service from day one. - Determine delivery tactics
Identify the target audience’s preferred means of communication – email, text message, company portal, etc. Then, schedule deployment strategically so the messages will not be overshadowed by other critical communications going out during the same time. - Create compelling, concise messages
Communications should be short and clearly explain how employees can benefit from using a direct deposit platform, e.g., it’s quicker, faster, more convenient, etc. If the payroll provider offers self-service or a mobile app, it may help to include those features in the messaging. - Use various communication channels
Even if the target audience prefers email, other mediums, such as social media or flyers in common areas, can help reinforce messaging. Managers should also be encouraged to remind their direct reports about the availability of electronic pay during team meetings. - Measure and refine
Monitor direct deposit enrollments to evaluate the effectiveness of the communications campaign. If the results fall short of the intended goal, solicit employee feedback and adjust the messaging tactics as necessary.
Frequently asked questions about payroll software direct deposit
When will my employees get paid?
Generally, employees who enroll in a direct deposit service can access their earned wages on the scheduled payday if their employer promptly processes payroll. In some cases, depending on the financial institution, funds are available the day before payday.
This guide is intended to be used as a starting point in analyzing direct deposit software payroll and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax advice or other professional services.
