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Paper Paychecks Are So Yesterday
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By Karen White

It’s payday, and it’s time to walk the office and disperse the paychecks. That all-American, most-treasured time of the week called “payday;” and you get to be the hero for the day. But what’s this? Where is everyone? Why aren’t folks crowding around your office, anticipating the time-honored tradition of receiving their hard-earned paychecks? Then you remember…today begins the time for the “digital paycheck.”

When it comes to payroll, the number of companies going digital is growing. In 2005, the number of Direct Deposits increased 5.1 percent to more than 4.4 billion payments, according to information released by The Electronic Payments Association in May, 2006. However, most of that growth comes from large companies. In fact, according to a recent survey by the National Federation of Independent Businesses (NFIB), 74 percent of small businesses don’t offer their employees direct deposit, most citing that the company is too small to do so. They assume that direct deposit will be costly or difficult to administer. However, I submit that starting today, small business owners should care about going digital with payroll. It really comes down to three primary reasons: convenience, accuracy, and employee benefits.

Three Advantages

Convenience: If you’ve ever felt like Charlie Brown and his kite as you try to arm-wrestle a ream of check stock through your printer, or if you’ve waited in line at your bank to make a federal tax deposit (try this with a toddler in tow), you know that paper payroll can be a hassle and a time sink. Compare this to the experience of clicking a button to approve a direct deposit payment or pay your 941 taxes. When we talk about the “digital paycheck,” we aren’t just talking about paying employees. “Going digital” also means paying your taxes, filing your tax forms, and keeping all your payroll records electronically. By embracing the digital paycheck, you’re going to have more time to dedicate to your business.

Accuracy: There are lots of great things that come in the mail- birthday cards, photo reprints, maybe even a really great coupon book from time to time- but when the return address is “Internal Revenue Service”, it’s typically not the kind of mail you like to get. One of the most common reasons employers get greetings from the IRS is a mistake on their tax return. Let’s face it: filling out forms by hand isn’t just time-consuming, it’s error-prone. Going digital allows you to avoid errors by using a system that integrates all your payroll data in one place. A good payroll system allows you to do more than type information into an online form. It takes the hours you enter for your employees and automatically turns that into guaranteed-accurate paychecks, tax deposits and tax filings, and lets you pay and file with the click of a button.

Employee Benefits: Chances are that at least some of your employees are banking online; 53 million U.S. consumers do, according to a study released by the Pew Internet & American Life Project in November 2004. And that number is growing every year. It’s a phenomenon that continues to shift how people handle their finances. Going to the bank simply isn’t part of the payday routine for employees today. For an increasing percentage of the workforce, direct deposit is the only way to go. And in a paperless world, printed pay stubs are a relic of the past. Providing employees online, anytime access to paycheck records is key to the digital payroll vision. For example, with PayCycle, employees can view and print their paystubs through a secure website, anytime, at their convenience.

The Paper Paycheck: So Yesterday

All small business owners yearn for convenient answers. Right now, we already face a barrage of regulations that can hamper even the most talented manager’s ability to run the basic operations of a firm. Moving to the digital paycheck is safe, secure, easy and efficient, and it doesn’t have to be expensive. That’s why more and more people seek technology to alleviate regulatory headaches, keep their employees happy, and give them time to think about their next great idea. How about you?


Karen White is the Vice President of Product Management for PayCycle.
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