The National Automated Clearing House Association (NACHA) has
come up with a creative way of encouraging more US companies to
convert employee wage and salary payments from paper cheques to
direct deposit.
NACHA’s approach is to focus on the cost savings that can be
achieved by providing employers with an online calculator developed
by NACHA’s Marketing Management Group and consulting firm Treasury
Alliance.
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The calculator which uses industry average data and some 30
variables requires inputs such as employee number, the percentages
that are salaried and hourly paid and existing and targeted use of
direct credits.
Users can also download a spreadsheet version of the calculator
that allows companies to replace the industry-average information
with their own cost information to derive a calculation specific to
their company.
For cost-conscious companies the results should leave little
doubt that switching to direct credits is a must-do.
For example, a company employing 1,000 people all on a salaried
basis and all paid by cheque would, according to the calculator,
reduce its annual costs from $69,105 to $28,595 by completely
converting to direct credit.
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By GlobalDataFor a company employing 1,000 people all employed on an hourly
basis and paid by cheque each week, savings achievable are even
more astounding.
Total annual costs for the company which each year must issue
52,000 cheques is $407,090, a figure that includes $840 for the
direct deposits required to cover payments.
By converting all employees to direct credit the company would
slash its total annual costs to $58,985, a saving of $348,105 or
$6.69 per payment.
Cost savings will become even more significant from January 2009
when the US Federal Reserve Board ups its paper cheque processing
fees by a whopping 41 percent. A 5 percent increase came into
effect at the beginning of 2008.
According to NACHA, three out of four employees who have a
direct deposit option available from their employers use it and of
the users 97 percent report being “very satisfied”.
