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Aaron
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Hi Liivi,
 
Direct Deposit is the preferred method of payroll issuance at many companies, and it is easy to see why.  It is incredibly convenient.  There is no need for employees to find a bank branch to deposit a cheque at, nor do they miss out on receiving a cheque due to an absence from illness or vacation. 
 
In addition to convenience, the mere consistency of paying all employees at the same time (rather than when they each cash their cheques) helps to make cashflow more predictable for the company. 
 
It is also a safe method of payment, as there is no threat of having a cheque get lost or stolen.
 
Some of the major disadvantages include, for example, that more paperwork is sometimes involved.  In addition to preparing payroll for direct deposit, typically the company must also prepare the “non-negotiable” pay stubs to present to the employees on payday.
 
Also, once a direct deposit account has been linked to an employee’s bank account it becomes taxing for an employee to deposit their pay elsewhere.  If they are changing banks or closing an account, they will need to coordinate with their employer each time a change is made.  
 
Regarding the issuance of direct deposit, it is sometimes more difficult for an employer to reverse these types of transactions when made in error than it is a cheque.  Standard fees will also apply for the set-up of this account, and the employer will typically be charged a small amount per payroll transaction.  The number of employees you plan to pay will also likely be a factor in cost. 
 
When exploring whether it is worth it for your company to take on this method of payroll payment, it is always best to contact your bank to discuss applicable fees.