Reducing Your Overhead Costs by Using A Paperless Payroll System
Overhead is an expense that is generated by anything other than those derived from direct labor and direct materials. In other words, overhead is the materials used to support the production of what you are selling.
For a clothing retailer, overhead can consist of stockrooms, rent, human resources personnel, shopping bags for customers, and such.
For a consulting business, overhead can consist of office desks, chairs, printers, rent, and utilities.
Any business, regardless of what they are selling, is likely to have overhead costs. So whether it’s a product or service you are selling, your company will accrue overhead costs.
However, this doesn’t mean that you can’t control or mitigate them.
A smart business owner will place a measurable amount of effort into reducing overhead costs to the lowest level possible.
Minimizing overhead can be more straightforward than one thinks! A simple way to reduce overhead is to switch from physical paychecks to direct deposit method. Direct Deposit is commonly called “going paperless” in the business world.
When you go paperless and switch to cloud-based accounting and payroll systems, you not only save your wallet, you save the planet too!
What in the World is Going Paperless?
“Paperless” Means Less Paper. Literally. Pretty self-explanatory.
Going paperless is one great way to reduce waste and overhead. Opting for a paperless payment method, like direct deposit, is an option that should be highly encouraged by both upper-level management and employees.
Both parties involved will reap the benefits.
If your company pays every employee using direct deposit, the business will save on a ton of paper. As a result, it’s easier for managers to stay organized and more accessible to keep clear of piles and piles of clutter.
With paper checks, the risk of the company and their payroll vendor losing paychecks is higher than with direct deposit, which brings up a liability issue.
Who is responsible for a lost check? The payroll vendor? The company? Either way, there’s probably even more paperwork involved to sort this kind of a mess out.
Direct depositing is easier for not only depositing but for retrieving data and information efficiently.
Imagine that you’re trying to calculate your monthly or yearly income and expenses. You begin by collecting all paychecks paid out during the month/year so you can get a numerical figure, but you can’t seem to find certain paychecks. It can be a frustrating situation.
In most cases, direct depositing vendors will give their client’s access to view all the paychecks paid out in certain months or years all online by just signing into their account.
Everybody enjoys getting paid. What’s better than that? Getting paid on time.
Switching to a direct deposit method can help companies pay their employees on time. Employees who utilize direct deposit usually get paid faster than those who don’t. Most businesses in the U.S. pay out their employees on either a bi-weekly or monthly basis on Fridays or Mondays.
So, if you are getting paid on a Friday, your paycheck will most likely be directly deposited into employee’s bank account Thursday around midnight. Employees are happier because they get faster access to their funds.
Physical paychecks, in comparison, requires a bit more effort for you to deposit.
Once the employee acquires their paycheck, that is, if the paychecks physically arrive at your business on time, the employee will need to go to their bank and deposit it.
If you are depositing a paycheck on a Friday, you may not see your funds available until the following business day, Monday.
More banks are beginning to implement paycheck photo applications so the receiver can save a trip to the ATM by just taking a photo of the paycheck and depositing it this way. However, if this action isn’t performed by a certain cut-off hour on Friday, you still may need to wait until the following Monday.
This method is one of a long list of ways to reduce overhead. Call us today and find out how arrow cloud bookkeeping can help you cut back on your overhead costs!