Direct Deposit Means Green for SMBs - InformationWeek
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6/22/2010
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Lamont Wood
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Direct Deposit Means Green for SMBs

Using direct deposit rather than writing paper payroll checks can save money, but most SMBs don't do it.

Using direct deposit rather than writing paper payroll checks can save money, but most SMBs don't do it.Using direct deposit (DD) for a payroll can save anywhere from $2.87 to $3.15 per paycheck, compared to writing paper checks, according to a survey recently conducted by an organization called PayIt Green.org.

The pro-DD results were pretty much a foregone conclusion, given that the organization exists to promote direct deposit. But the survey also found that only about 40 percent of small business employees use DD for their paychecks. The rate of DD use among employees of large corporations was more than double the SMB level, at 86 percent. The apparent reason for the discrepancy is that SMBs don't typically offer DD for their employees.

Yet, it's cheaper to process payrolls without paper. Accepting that you can save an average of $3 per check by switching to DD, an SMB with 25 employees and weekly paycheck could save $3,900 per year. A business with a hundred employees could save $15,600 yearly, probably with minimal effort.

There's also the time element, as PayItGreen.org estimates that SMBs with paper payrolls spend three to five days yearly writing checks. Each employee, meanwhile, spends nine to 24 hours yearly going to the bank with them.

Aside from saving time and money, there's also the green aspect-PayItGreen estimated last year that a pound of paper is saved yearly for every employee that uses DD. The group estimated that if every employee in the US who had access to DD used it, it would save 11 million pounds of paper, 4 million gallons of gas, and 32 million pounds of greenhouse gas emissions yearly.

Basically, we are not living up to the potential of the computer revolution if we still cling to paper checks. The only reason not to switch to DD would be that it is too much bother, but sticking with paper also seems like a lot of bother.

The survey was involved a poll of 5,000 employed Americans and was conducted by Javelin Strategy & Research. PayItGreen.org is a consortium of banks and payment organizations, and is managed by NACHA (whose pre-acronym name was the National Automated Clearing House Association.)

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