Direct deposit is an all-around good idea because of the check processing steps and costs you can avoid. First, checks must be printed, signed, stuffed into envelopes, and distributed to your employees as well as your vendors. There are a number of delays that happen with this manual process. For example, if employees are not available, a manager has to retain their checks for later pick-up. If checks are stolen or lost, the payroll or payables staff must cancel them and manually issue replacements. On top of all this, the person in charge of the bank reconciliation must track those checks that have not been cashed and follow up with employees and vendors.
You can eliminate all of these steps by switching to direct deposit making this a seamless accounting process. There are unique advantages to direct deposit because of the “set it and forget it” process. There is no longer a need to have an elaborate set of controls over the storage and tracking of unused check stock. You may even want to give employees and vendors access to their remittances over the Internet, so they can access their remittances not only for the most recent pay period, but for many prior periods.
The cost of direct deposit is extremely cost efficient. Though the bank typically charges a small fee for each direct deposit, this proves to be less expensive than the cost of the check stock, envelopes, bank processing fee, and labor needed by a traditional paycheck system. Organizations can also choose to implement an automatic bank reconciliation procedure where checks and other transactions can be automatically cleared against transactions contained in an electronic file from the bank.
Open Door Technology has been integrating people, processes and technology since 1992. Focused exclusively on delivering Microsoft Dynamics® NAV (formerly Microsoft Navision) products and services, Open Door has become one of the top resellers and development partners in North America.
By Malcolm Roach of Open Door Technology, Canadian Microsoft Dynamics NAV Partner