Paper Checks Vs Direct Deposit: The Best Way to Pay Employees

If you own a business that has employees then congratulations, you are a job creator. However, being an employer comes with a set of responsibilities. One of which is to efficiently manage the payroll of your staff. Barring paying employees using cash, there are two primary payment modes to choose from, direct deposit and paper checks. Each of these payment methods come with their unique set of advantages and if you choose right it can benefit both your business and employees. In this post, we will compare the two ways and leave you with a final verdict.

Paper Checks

When people think of checks they imagine long gruelling hours of careful writing and signing. However, manually writing checks is no longer necessary. Businesses use accounting software to print checks in bulk, which is a much more automated and faster process. The advantage of issuing paper checks is that it doesn’t matter if your employees have bank accounts or not. Even short term employees with no bank accounts can be given a check. Checks have also evolved and are integrated with modern web technologies. Businesses can now order cheap checks in bulk from online sellers and have them delivered next day. Employees receiving the check can use mobile banking apps to deposit checks without stepping into a bank.


Image Source: Pixabay


Integrates with Accounting Software Packages: Checks are compatible with popular accounting software programs such as QuickBooks. Employers can not only store employee banking details and print checks in bulk but they can also keep a tab on all the checks issued.

Eliminates The Need to Open An Employee Bank Account: If you don’t want to go into the trouble of opening bank accounts for your employees then paying them by check is almost necessary.


Checks Can Be Stolen or Lost: Checks can be stolen or lost, and if you have a large employee strength, this can end up being a regular affair.

Demands More Processing Time: Checks take more time to get processed, which can affect employee morale.

Direct Deposit

Most employees in the United States are paid via direct deposit. This is a quick process of sending money from the business account to the banking accounts of each employee. For this to work, employers are required to collect the banking information of all employees. Employers can even automate the payments to ensure every employee gets paid at a particular date. When it comes sheer convenience direct deposit trumps all other methods.


Money Gets Transferred Almost Instantly: There is almost no wait time. Money is instantly credited from business checking accounts and deposited to employee accounts. This ensures your employees get paid exactly on time.

Take Less Effort: Business owners and accounting managers simply need to review the payroll before sending out the salaries.


Businesses Need to Pay Setup Fees and Processing Fees: To be able to pay employee salaries using direct deposits companies need to pay a one-time set charge. Companies also need to pay a processing fee for each transaction.

Most businesses use bank deposits to pay their employees for good reason. The money gets transferred on time, which ends up boosting employee morale. However, if your business requires you to hire short-term employees or contractual workers, then paying by check is definitely the way to go.


About Author
Priya is a technology blogger. She loves to blog about blogging, business, gadgets, social media, latest tech news and wordpress.


Leave a Reply