Any business with paid employees should be using a dedicated payroll solution. To make the payment process transparent and convenient, businesses of any size can opt for direct deposit payroll software.
Direct deposit is a form of electronic payment via ACH (automated clearing house) that many organizations use to pay their staff. Even the U.S. federal government uses it to send social security payments.
Directly depositing employee salaries to their bank accounts saves the cost of paper checks, is environment friendly and lowers the chances of fraud due to loss or theft of paper checks. Direct deposit payroll software helps out by processing unlimited transactions to meet your staff's payment needs.
We created this buyer's guide to help you understand how this software works. We're detailing everything you need to know before you choose a solution for your business.
Here's what we'll cover:
Direct deposit software helps streamline the complete payroll process, including calculating salaries, deductions, bonuses and employee time off. It makes the payroll process less cumbersome and time-consuming.
This type of software also makes it easy and safe to consistently pay staff salaries. Businesses can set up a recurring process with their banks to electronically transfer the money from their savings or checking account into the employees' bank accounts on a specific day every month.
Vendors in this market offer a variety of functional breadth and depth in their solutions. Let's look in detail at the common capabilities of direct deposit payroll software:
|Direct deposit||Lets users deposit employee salaries directly into their bank accounts on the payout day each month. The software automatically withdraws funds from your bank account and deposits it into employees' bank accounts.|
|Tax management||Calculates state and federal payroll taxes automatically and deducts the correct amounts from employees' salary. It also considers tax exemptions that the government offers to employees to reduce their taxable gross income.|
|Employee time off management||Allows employers to track time off hours that they've allowed, have been taken by employees and are left remaining as sick days or paid vacation time.|
|Employee portal||Allows employees to access and manage their personal information. They can also perform a few functions, such as viewing their time off activity or leave balance.|
|Third-party integrations||Lets users integrate the direct deposit payroll software with other existing systems in the organization such as HR and accounting software.|
Before you start evaluating various direct deposit payroll software, you should know which buyer category you fall into and what that means as you choose direct deposit software. We believe most buyers can be categorized as one of the below types:
Small businesses. These buyers focus on basic day-to-day requirements such as depositing employee salary, calculating taxes quickly and managing employee time off efficiently. They require a simple, dedicated direct deposit payroll software that fulfills their needs and can be scaled up over time. They're mainly looking to streamline their payroll process at an affordable price.
Midsize businesses. Apart from the basic capabilities, these buyers may need additional and more advanced features. They usually have an established HR team, so they'd also need third-party integrations with existing HR software to import/export employee data.
Large businesses. These buyers need almost all the features in a solution. They ideally look for a full-featured solution that's part of a suite that covers extra modules, such as HR and accounting, for smoother operations. Due to a larger number of employees and to avoid the hassle of handling everyone's daily needs, they may also require an employee portal that allows employees to access, view and manage their personal information at any time.
While a streamlined payments process is the most important benefit of this software, here's a list of additional benefits:
Safety and reliability. The direct deposit process is a convenient way to pay employees on the payout day itself, regardless of their location. Paper checks can get delayed in reaching the bank due to bad weather, misplaced checks, employees on vacation etc. Any of these reasons could result in employees not getting paid on time, which can put a financial strain on their personal lives.
However, direct deposit isn't dependent on any such factors. Businesses can easily set up the software and ensure stress-free pay schedules for themselves and their employees.
Time and cost savings. Employees who receive paper checks may feel the need to leave work on payout days to deposit their check during business hours. This means low productivity on payout days. As the software automatically credits the salary into employees' bank account, you save their time as well as your organization's.
In addition, you'll no longer have to spend hours writing or printing checks. With direct deposit payroll software, you also save on costs for paper checks, postage, shipping and packaging.
Now that you're aware of the features and benefits of direct deposit payroll software, you should consider purchasing the software to automate pay distribution. Here's a list of questions you should ask the vendor before shortlisting suitable solutions:
Is the software scalable? Check whether the direct deposit payroll software you're considering will adapt and scale up as your business grows. The software should automatically add new employees to the distribution list when they're onboarded. Make sure you ask the vendor whether you'll be charged extra for adding new employees.
Does the software support integration? Ask vendors whether their solution supports integrations with your existing applications such as HR and accounting systems. Be specific about all the stakeholders who'll use the software and the effort, time and costs associated with integrations.
Does the vendor offer customer support? Find out whether the vendor offers support 24/7, only during business hours or not at all. Also, ask for the available support options such as email, phone or live chat. Make sure to ask the vendor about their usual response time, so that you're able to get your employees' salary issues and queries resolved on time.
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