While discussing the sending or receiving payments, we have many options including, electronic payments, checks, and cash. Electronic payments can also be known as direct deposits used by most organizations. Sometimes direct deposits are an important requirement. Luckily it’s the safest and reasonable way for all members of the party.
If you are owning a business, direct deposits play a significant role to make payday more affordable for the company and its employees. When you choose direct deposits, your payroll process becomes easy and you know when your employees get paid. Direct deposits actually the easiest and convenient thing. We are going to discuss setting up a direct deposit and its benefits in today’s article
Transfer of funds from one bank account to another through electronic payments is direct deposit. As a company owner, you have to send payments to your employees by business bank accounts. As a result of direct deposit, your employees will receive electronic payments-paychecks from your bank account. It may take very little time as compared to paper check deposits because paper checks can take 2-5 working days. If you have a large amount, making paper check deposits may take more time. Direct deposits do not make you wait for days and you can access your account at any time.
Process-Setting up a Direct Deposit and its Benefits
Every bank and financial institution has different ways of setting up direct deposits. Commonly you have to submit your identity card number, routing number, phone number, and other specific information. Personal checks may contain 9 digit router and bank account number. Below, we have mentioned the formalities for direct deposits.
The direct deposit authorized form is a paper or certificate that allows the third party and usually the company’s owner payroll to send money to a bank account. This form has all financial institution’s privacy policies with rules and regulations.
Whenever you are going to open your bank account, the following information is compulsory for security and validity.
Mail Address of Bank
Mail address of the bank always mentions on a bank’s website, credit unions, or on a bank statement. You must know your employer’s address or the address of the person you are in contact for transfer while using the direct deposit form.
This 9 digit number is located on your bank statement or along the bottom of the checks.
It can be written on the bottom of your check along with the router number. And written on the deposit slip or bank statement.
There are different account types like saving and checking accounts. You have the option of which accounts you want for direct deposit.
Information forms required security numbers to make your accounts safe.
Name Of Applicant, Home Address, and Email Address
If an employer wants to send you some documents physically your basic information such as name and home address must be mention on the deposit form. An email address is mentioned to send documents in digital form.
If you are facing a difficulty that from where this information can be collected there is the option of call centers of banks that are working twenty-four hours and available for customer service. You may ask for any kind of information regarding setting up a direct deposit and its benefits.
Deposit Amount Confirmation
Paychecks amount can be in one saving account or multiple accounts, it depends on you which one you prefer. Most direct deposit recipients choose their entire payments to be in checking accounts and some prefer to keep 10-15% of the cash in saving for kind of emergency situation.
Some financial institutions allow the recipient to direct deposit in one or more than one account.
It will be beneficial for the person for budgeting that how much you save, spent, and invest.
Initially, some banks are required to submit the deposit slip or you may say voided check for the verification of router number and account number before transferring the funds. Otherwise, you can scan the check and send it to the bank via email. Make sure to make a line on the blank check and write “Void” before sending, so that no one can withdraw money from your bank account.
Submission Of Form
After the completion of this step-by-step process, submit the form to the financial institution to complete their official formalities. Direct deposits can be effective after two pay cycles. And your direct deposit is ready so you can make payments and keep an eye if any bill pulls from your account before transferring direct deposits funds.
Positives And Negatives Aspects of Direct Deposits
Direct deposits have so many benefits but everything has drawbacks too. We have noted down some plus and minus points to keep in mind while using direct deposits.
Positive Aspects of Direct Deposits
Start off each payday, direct deposit automatically submit money into your account.
Once direct deposit is active, you don’t need to waste time by visiting banks.
You can save more money by a deposit in more than one account like if you want to deposit in a saving account or checking account it is your preference.
Direct deposits are the safest and confidential way of transferring funds as fewer people can view your information and where you are sending your money.
It is eco-friendly as transferring of funds done electronically so there is no need of printing paper.
Negatives of Direct Deposits
When funds are transferred automatically it is very easy to forget. This is the only drawback of direct deposit you must keep a strict eye on the alerts and notifications that you receive on your phone via text.
Direct deposits are making life very easy for everyone and it has a lot of benefits without any hassle and fraud. It provides a more secure transfer in a very short time. Hope this information helps you while you are searching about setting up a direct deposit and its benefits!