Many workers never actually touch their paychecks as direct deposit becomes more prevalent. According to the Electronic Payments Association, automated clearing house payments, including direct deposits, have doubled in the last five years, spurred by growth across all transaction categories. Almost three-quarters of working Americans use it for their pay.
Human resources professionals in Mississippi agree that depositing employee paychecks directly into bank checking accounts is a good thing for organizations of all sizes, providing benefits to employers and employees.
4-County Electric Power Association in Columbus has used the payroll method for 12 years for its 105 employees and it’s satisfied with it.
“It’s wonderful,” said Connie Otts, human resources and benefits administrator. “We like it and have had no complaints.”
She recalls only one time when the funds didn’t get into the right account, and brings up the importance of employees keeping their employer notified of any changes.
“I know that companies smaller than us are using it,” she said. “My husband works for an air conditioning and refrigeration company that is thinking of doing it.”
Otts says direct deposit might benefit smaller companies more than large ones. An example is the time required for construction companies that hand deliver checks. “That can be unproductive and time consuming,” she added.
Forrest General Hospital in Hattiesburg has been using the direct deposit system since 1994 and it has been mandatory since 1997, according to Rob Stultz, vice president.
“Our employees like it because the money gets to their banks much faster,” he said. “Also, employees don’t have to make trips to the bank or risk mailing their deposit themselves. It reduces expenses for employees and employers.”
Stultz added that any problems that arise with the system have been very few and can be easily resolved.
BancorpSouth, headquartered in Tupelo, has been using direct deposit for payroll in excess of 25 years. Lyle Stockman, vice president and payroll manager, says it’s the only way he’s ever been paid and he’s been with the bank for 23 years.
“It’s something banks have always encouraged to customers and employees,” he said. “It is the best and certainly the safest way to be paid.”
He says that’s because the payroll department does not have to take the time to prepare paper checks, and it’s simpler and quicker. “We don’t have to worry with delivering checks, and there’s no danger of payments getting lost. Something can happen to a check.”
Stockman goes on to say that he can’t think of any disadvantages. “Our employees seem to love it,” he said. “I can’t think of anything that’s gone wrong with it. In the banking environment, it’s so engrained to do it that way.”
Russ Willis, director of human resources at the University of Southern Mississippi in Hattiesburg, says USM has offered direct deposit to its employees for approximately 12 years. Beginning in January of next year, it will become mandatory for all new employees.
“When the university originally offered direct deposit, there was some resistance from employees who did not think it was a secure way of receiving their paycheck,” he said. “However, there are now very few employees who have that same concern as the electronic transfer of data has become a much more significant part of everyday life for our employees.”
He added that the university allows employees to have their paycheck go to any bank or financial institution in the United States as a direct deposit. A very small number of financial institutions in the country are not in the automated clearing house network.
Employees who change financial institutions need to inform their employers of this change. They may need to complete a new authorization form and it’s a good idea to leave the old account open until the first direct deposit transaction appears in the new account.
Part of the ease of direct deposit is having the funds available when the financial institutions open for business on payday. If the pay date falls on a holiday or other dates when financial institutions are closed, employees’ funds are available on the day before the scheduled pay date.
Employers issue a payment summary with every deposit that looks much like a paycheck stub. This document shows deductions for taxes, insurance and other obligations, and will reflect the balance that was deposited to employees’ accounts. The amount of money deposited is confidential, and privacy increases with direct deposit.
Contact MBJ contributing Lynn Lofton at firstname.lastname@example.org.
BEFORE YOU GO…
… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.
If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.Click for more info