We’ve all read different tips and tricks on how you can save money by tweaking your daily routine. Whether it be personally, or from a business standpoint, saving money adds up over time. There are the obvious ways to save such as going paperless, bringing your lunch to work, and installing an automated thermostat. Here are a few ways businesses can save on payroll processing.
Various Pay Frequencies
Payroll frequencies can be confusing, here is a quick list to lay out the various frequencies available.
Weekly - Running your payroll on a weekly basis is a great way to attract top performers, however it cuts into your profit. When you process payroll weekly it means your payroll department (or payroll software provider) is spending more time prepping that payroll. The money you spend in labor to run 52 payrolls each year surely adds up. However, that does not mean running a weekly payroll is not right for your business.
Bi-weekly - For those of you who are not familiar, bi-weekly means you are paying your employees every other week, or 26 times per year. Typically, running a bi-weekly payroll will cut your payroll costs in half (depending on your method of payroll processing). This is commonly seen in business because it is a less expensive means of paying your employees, but it is often enough to still please employees.
Semi-monthly - A semi-monthly pay frequency is when you pay your employees twice a monthly, usually either on the 1st and the 15th, or the 15th and the last day of the month. This frequency equates to paying your employees 24 times throughout the year. This is more attractive to employers (and potentially less attractive to employees) because it significantly lowers the cost of running payroll.
Monthly - Running a monthly payroll is just as it states, paying your employees on a monthly basis, or 12 times throughout the year. This is by far one of the cheapest options to pay employees, but is not seen often unless the business is one or two employees.
Quarterly - Paying employees on a quarterly basis (4 times a year) is rare, but some still use this frequency. As mentioned previously, this pay frequency is mostly limited to single employee businesses.
Each pay frequency has positive and negative aspects to it. Ultimately you need to chose a frequency that is both economical for your business, and will delight your employees. Finding balance between the two will save you money and maintain a happy workforce.
Have you ever worked for a business who pays their employees monthly or quarterly? If so, what kind of business was it? How many employees did the business have? Leave your answers in the comments section below.