Payroll schedules need to toe the line between appeasing employees and doing what’s right for your company’s bottom line.
The more frequent payroll occurs at your organization, the more strain you place on your operations team. Higher frequency payroll is also more expensive to maintain. Less frequency with payroll interferes with employee happiness, which can cost a significant amount in lost productivity and engagement over the long run.
(READ MORE: 5 Tips to Cut Payroll Costs)
So, what’s the right balance? How do weekly and bi-weekly pay schedules compare from an employer and employee perspective?
Are you looking for a way to improve employee morale? Paying them more often might be the incentive to improve attendance rates and increase productivity. Employees in industries with lower pay or hourly wages especially value weekly if finances are tight.
Weekly checks are not financially smart for small businesses. According to NFIB, individual deposit fees range from about $1.50 to $1.90 per deposit, on average. If you are a mid or large-sized business, then these fees add up quickly. The more often you cut checks or process payments, the more often you’ll pay these fees.
Hourly employees may have inconsistent weekly work schedules, which can include overtime. Weekly pay matches this inconsistent flow of work. If an employee works overtime one week and less than full time the next, then weekly payroll ensures that the company pays the employee that valuable overtime faster.
Payroll administration needs to account for more than just the weekly payments provided to employees. Payroll also includes the following:
It’s time-consuming to track all of these items down. The more often you pay your employees, the more time you are neglecting other necessary administrative duties.
With weekly payroll, you can be more organized. There is no confusion for when time cards need to be in or when payroll needs to be completed. You simply choose a particular day of the week and stick with it week in and week out. This goes a long way to ensure that the task is completed, without any deviation.
Paying employees bi-weekly instead of weekly requires an employer to process payroll only once every two weeks which reduces time spent on payroll processing and the likelihood of payroll errors, which can be equally time-consuming.
Bi-Weekly payroll may also make updating payroll records more convenient for human resources.
Payroll is closely associated with the morale of a workplace. Everyone likes when money hits their account. The more often employees feel the fruits of his or her labor, the higher morale may be. Paying employees more often, like daily or weekly, may also help alleviate financial burdens that employers may not be aware of.
A weekly payroll means employees might not get around to cashing paper checks in a timely manner which provides more opportunity for outstanding checks. In fact, tracking live checks can be a burden for human resources.
A more frequent payroll can also make it more difficult to account for taxes. If payroll distributes taxes over a longer period - say bi-weekly as opposed to weekly - then the possibility of paying the IRS for mistakes lowers.
If you use a payroll vendor, it’s likely they charge each time payroll runs. If you have dozens of employees on weekly schedules, these fees can add up. Depending on the amount of employees that are subscribed to direct deposit, the cost of paper checks could significantly lower with monthly pay vs. weekly pay.
As you can see, there is a divide. Bi-Weekly is more convenient for employers because of costs and time associated with payroll. And, weekly pay tends to be more beneficial for employees who want their money as soon as they earn it.
But what if a company could offer bi-weekly pay, and still allow their employees to be paid as often as they’d like?
Consider opting to use a platform—like what DailyPay offers—that connects to your timekeeping system and allows your employees to be paid whenever they want, without having to change your payroll frequency.
Or, create a strategy that addresses your employees' concerns. If you haven't, it might be time to survey your employees to see what concerns they have. While doing this, be sure to weigh your company's options when it comes to payroll by downloading our infographic that allows you to compare weekly and bi-weekly payroll schedules side-by-side.