Improve Reliability And Save Money On Distribution Of Payroll While Reducing Carbon Footprint

There are changes going on within the economy and the global climate that make the

move from paper checks to electronic payment more compelling each day. By offering paycards or paycards in conjunction with direct deposit, employers can greatly reduce or eliminate paper check printing and distribution.

When meeting with a company last week (using the telephone and webinar technology over the internet), I was told that they have no need and do not want to offer a paycard solution because they are exclusively focusing on an internal initiative to reduce their carbon footprint.

One of my favorite definitions of a carbon footprint is: a measure of an individual's, family's, community's, company's, industry's, product's or service's overall contribution of carbon dioxide and other greenhouse gases into the atmosphere. It takes into account energy use, transportation methods and other means of emitting carbon. There are a number of carbon calculators available for free on the internet that estimate carbon footprints for businesses and individual households.

Implementing a paycard solution can greatly reduce a company"s carbon footprint, as well as save the company and their employees money. Allow me to illustrate, using "ABC Company" as an example.

Through the course of our conversation, ABC Company told us they have 2,500 employees in 17 locations across the US and that 40% of their workforce gets issued a paper check.

How do those 40% get their paper check? In order to comply with their internally-set payroll standards, they issue checks on Thursdays and overnight them for delivery on Friday to each location.

Eliminating paper checks is important for many reasons. The obvious? Cost "" eliminate the escalating costs of overnight shipping for paper checks. I sent an overnight package two days ago using the carrier"s letter size envelope from Portland, Oregon to Dallas, Texas (approximately 1600 miles away). The shipping cost for this one letter package was $46.50!

The calculation on ABC Company"s shipping is as follows:

Paper checks are issued twice a month and then overnighted to 17 locations. Even when we calculate overnight shipping at a highly competitive rate of $25, ABC Company is paying $14,400 annually for the 40% of employees who do not participate in direct deposit to get their paper checks on time.

Now we can talk about paper paycheck-related supply expenses. Typical fees and expenses associated with a paper check include:

" Check processing and check clearing fees

" Stop payment fees

" Paper costs

" Printing and envelope stuffing costs

" Storage and archiving costs

" Payroll preparation. Yes, payroll still needs to be prepped, however by eliminating the paper check costs go from $1.01 to between $0.08 and $0.51!

" Time preparing, sending, opening and distributing of paper checks sent via overnight

" Stop payment fees

" Costs of managing un-cashed checks, also known as "escheatment"

Those are just some of the issues that payroll departments face every pay cycle. I"d like to clarify this last statement; when a direct deposit is issued, payroll is done. This is NOT the case with a paper check. The bulk of the time saved per pay cycle is realized after the check is out the door.

For illustration purposes, we"re going to go with what we understand from our conversation with ABC Company. Using typical and industry standards, by implementing a paycard solution to eliminate their paper checks, ABC Company could be saving $169,000 annually!

What about the employees?

Did you know that some banks hold employee check deposits for up to one week? Moreover, some banks are charging up to $8 to cash a check, even if they are the bank that issued the check.

For un- and underbanked employees, paycards offer immediate access to their money as well as the security a bank offers without the hassle of cashing a paycheck.

Based on the ABC Company example above, if 5% of employees that are being paid by paper check are using a check cashing service, wiring money to family in other countries, and buying money orders to pay bills "" they could save approximately $720,000 per year!

Increased profits and decreased carbon footprints

So, what can your company do to put you on the road to a more profitable bottom line and a smaller carbon footprint? Here are some ideas:

"Cut your shipping costs. When you implement a paycard solution, you are able to dramatically reduce your shipping expenses. If the paycard solution does not offer paper paystubs, they probably partner with a company that does. The most important thing to the employee is getting paid. They can look online at their paycard provider"s website to see how much was deposited onto their card and when. Many providers even offer instant text alerts when deposits are made. Once an employee knows their funds are available, the paystub becomes an after-thought. Many elect not to receive them at all.

"Take a look at your travel expenses. Can some trips be replaced with teleconferencing or webinar technology?

"What about the shredding company you use? Talk to your shredding company. You are doing your part by recycling. Are they taking action to reduce their carbon footprint by ensuring they are not travelling across town just to pick up shred bins from one location?

"Add a box or bin next to the sodapop machines and when they are recycled, donate the money earned to the company"s charity of choice.

"Did you know that energy is used even when electronic equipment is turned off? If your company is closed over a weekend, make a point to turn off computers and unplug any unnecessary electronics such as the microwave and coffee pot.

"Does your company offer ride-sharing? A simple shared calendar can be used to manage ride-share and carpool opportunities.

"Analyze your options to increase direct deposit participation and eliminate the paper check.

Ask Questions

When looking for a paycard provider, ask questions. What is the set up fee to the company/employer? Do they offer ongoing support? Do they offer the ability to customize the paycard to employer specifications? Do they offer companion cards? What kind of online and over-the-phone support do they provide? Is their support center at least bi-lingual? How easy is their enrollment process for employees? Can employees get a text alert when balances run low? Do they provide a welcome call to every employee?

Offer a paycard solution to your employees who do not currently take advantage of direct deposit. There are several paycard solution providers that do not charge a setup fee to the company and a minimal or no charge per month to the employee.

Paycard solutions create a positive impact to your bottom line and the financial well-being of your employees while allowing you to take action to actively reduce the companys carbon footprint.

by: Thomas Secor

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