Direct Deposit simplifies payments for any business regularly paying employees or vendors for services. With direct deposit, electronic payments can be made directly to a bank account, eliminating the need for paper checks or initiating payments manually. The funds are made available to you right away, and inversely funds are taken from the payee immediately. Banks with online banking systems – so most major banks – then offer their customers information about their available funds right away.
In fact, it is such a fast and reliable method for sending money that it is often used for income tax refunds and other types of government returns.
As a business, utilizing direct deposit saves an enormous amount of time and money. No need to make regular trips to the bank to deposit checks, no need to issue paper checks to employees, no worries about checks getting lost in the mail or transit. If you are paying employees, vendors, or other businesses that are located out of state, using direct deposit means you will never be faced with a check being put on hold and inadvertently issuing a late payment.
Since direct deposit relies on bank account and routing information, you can choose to send funds to any type of account. Employees can opt to send direct deposit payments to their savings account, which is a common money saving strategy as recommended by financial advisors.
If your business does not currently offer direct deposit to employees or regular vendors, it may be a good idea to start. Direct deposit is easier for both sides, allowing payments to transfer seamlessly between accounts and funds to be available much faster.