Payroll

USPS Concerns: Why It’s Time to Think About Electronic Payment

April 9, 2020

Electronic payment methods are a good option for paying employees. Here is why concerns about the USPS should make us think about paperless pay.

Photo of the side of a USPS delivery truck.

It’s nice to have options, and we live a free society where we place value on having choices.  For example, we like being able to choose between going out to eat or staying in.  Sometimes, it’s nice to visit a restaurant for a sit-down meal.  Other times, we want nothing more than a restaurant delivery or take-out.  We like having options for banking, as well.  One day, we don’t mind an online chat with a personal banker. Other days, we feel the need to visit the branch for a face-to-face meeting.  However, we have entered into a unique time in history where our choices are quickly becoming fewer. This, though, is happening in order for us all to sacrifice for the greater good.  Accordingly, now is the right time to get serious about electronic payment options and going paperless.

As we all know, the COVID-19 pandemic is impacting nearly every industry imaginable.  Here is how the pandemic is affecting the United States Postal Service (USPS) in particular. Also, this will show why you should be moving toward paperless pay for your employees.

The Paperless Conundrum

Now, you might be wondering why paperless pay is a hot topic at the moment.  In fact, many industries are urging paperless options.  Simply put, we don’t have 100% assurance that the COVID-19 virus cannot be transmitted through mail or delivery services.  Therefore, out of an abundance of caution, some believe reducing paper deliveries could help reduce the spread of the virus.  Furthermore, there is the obvious concern for those working in close quarters such as mailrooms, perhaps unknowingly infected. Still, the opposite side of problem is that the USPS needs mail to stay in business. It’s an obvious conundrum.

USPS Concerns

Photo of a line of USPS mailboxes.
Photo by Eraser Girl | CC by

Truthfully, the current state of the USPS is a dire one.  We hear about preexisting underlying conditions being the reason for some people being severely affected by COVID-19.  Interestingly enough, the same can be said for businesses during this time.  For example, if a business was already experiencing tough times, then the toll can be great, if not beyond repair.

That, in a nutshell, is the situation with the USPS.  Despite a high approval rating, this entity has a net worth in the negative billions of dollars. Furthermore, the negative liabilities double that number.  So, as epidemiologists worry of the potential spread of the virus through mail and delivery services, the outlook worsens still.  In a worst-case scenario, the USPS could be forced to cease operations as early as June this year.  Consequently, mailing important items, such as paychecks, will no longer be an option.  Therefore, employers need to understand the ins and outs of electronic payments.

The Payroll Process

Now, the payroll process can be as simple or as complex as you make it.  The main determining factor of the efficiency of your payroll process is technology.  Hence, if you are using an advanced platform for processing payroll, the steps will be fewer and more efficient.  Furthermore, if you are using an advanced platform, you will probably already have the option for paperless pay.

Related:  Financial Wellness Programs for Employees

So, here is an overview of the steps your payroll person takes each pay period when paying your employees. 

Payroll Processing Tasks

  • Collect hours from hourly employees – There are different ways to collect hours from employees. A couple ways include punching a time clock or time and attendance software.  Also, some employers still use pen and paper or a spreadsheet to keep track of hours worked. 
  • Calculate gross earnings – This is where you will multiply the hours worked times the pay rate.  For salary employees, you take their annual salary divided by the number of pay periods in a year.  You will also add in any bonus and commissions here.
  • Calculate net earnings – After calculating gross pay, you will subtract deductions. Common deductions include those for taxes, benefits, retirement contributions, and garnishments, among other things.
  • Cut checks – Here, you are either going to cut paper paychecks, or you are going to initiate an electronic payment.  You might even do a combination of both.
  • Keep accurate payroll records – Finally, you will want to make sure you keep track of this information each pay period.  You will likely refer back to the reports you generate, so keep them in a safe and secure place.

As you can see, while these steps are abbreviated, they are still tedious.  Therefore, it is a good idea to have a reliable payroll platform, helping reduce time and errors.

What is Paperless Pay?

Image of a man holding out empty pockets because he received an electronic payment instead of cash.

As you might already know, there are several ways an employer pays employees.  These types of payments include cash, paper check, and direct deposit.  Each method has its own benefit.  For example, part of compensation for restaurant workers is cash tips.  The benefit of cash tips is that employees can take home pay the same day they work.  Some employees prefer paper checks because they don’t have to carry around a large sum of cash. Also, they can make a deposit or cash the check when they are ready.  Paperless pay, however, has a couple of categories under it for electronic payments.  These categories include the following:

  • Direct deposit – This is where an employee will provide you with their bank account and routing information. After that, you will initiate an EFT transfer.
  • Pay cards – This is where your employees’ paychecks will be transferred electronically to a pay card. Then they can use the card as a debit card or at an ATM to withdraw funds.
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Another great thing about paperless pay is that you can even get your paystub electronically.  So when we say paperless, it’s paperless all the way.

Transitioning to Paperless Pay

While changes may be scary, know that transitioning to paperless pay doesn’t need to be.  In fact, going paperless should be a good change that saves you time and money.

So, what do you need in order to transition your employees to paperless pay and electronic payments?  First, you will need to make sure you are set up with software that can support paperless pay.  Second, you will need to determine whether employees want direct deposit, or if they will opt for a pay card.  Third, get the bank account and routing information from employees who opt for direct deposit.  Finally, explain to employees what they can expect for their upcoming paychecks, and how to access their paystubs virtually. 

Things to Consider When Going Paperless

It is important to communicate proper expectations to your employees when you decide to go paperless. Specifically, make them aware that there may be a pay period between when they sign up for direct deposit and when they receive funds in their accounts.  This is due to a practice transfer to make sure the account information is accurate.

Also, you will want to remind employees to keep you current with any updates to banking information.  This way, you can avoid sending funds to closed accounts.

Paperless Pay Makes Life Easier

In summary, going paperless could make your life easier. It could also potentially reduce the risk of exposure to COVID-19.  In addition, we don’t know for certain what tomorrow brings for the USPS. This is because that division of the U.S. government is in the midst of a crisis, like many other entities.

So, it’s important that you don’t delay considering your options for electronic payments to your employees.  When in doubt, be sure to turn to a trusted payroll professional to get your questions answered.

Image of different methods of payment, including electronic payment.


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