Weekly Paychecks vs Bi-Weekly Paychecks
When it comes to the matter of weekly paychecks versus bi-weekly paychecks, which one is best for your company? A weekly paycheck is distributed every week, while a bi-weekly paycheck is distributed two times a month.
Bi-weekly paychecks can even be distributed three times a month, but this depends on the number of paying weekdays in a month (for example, if there are five Mondays in a month this could mean three payments in a month). Both timelines have their advantages and disadvantages. Let’s explore them below.
Pros and Cons of Weekly Paychecks
Pros
- Boosts trust and morale: Paying on a weekly schedule can be a great incentive for employees to improve attendance and productivity, as well as establish a foundation of trust.
- Better organization: With a weekly pay schedule, there won’t be any confusion when it comes to time card due dates and when payroll needs to be completed. The payroll administration in your company will be able to establish a smoother flow when it comes to paying weekly.
Cons
- Time strain: The payroll administration will have to work on a tight timeline when it comes to delivering weekly paychecks, and details such as taxes, time off, and sick pay also need to be taken into consideration every week.
- Extra fees: There is also the matter of deposit fees, which can usually average around $1.50 to $1.90. Per employee, these fees can quickly add up and include the fact that these fees
Pros and Cons of Bi-Weekly Paychecks
Pros
- Saves money: Having to play for supplier deposit fees when it comes to weekly paychecks is no longer a problem when these payments are moved to a bi-weekly status.
- Benefits employees: Bi-weekly paychecks can greatly benefit employees because receiving a paycheck on the same day every other week allows them to budget their finances better and pay all their necessary bills on time without further stress and worries.
Cons
- Less frequent payments: Because bi-weekly paychecks account for more days than weekly payments, this means employees are receiving paychecks between longer time increments. This can affect employee morale negatively as well.
- Possible cash flow problems: With bi-weekly paychecks, there are 26 accounted-for payouts a year. However, there are usually two months per year that have an additional third pay included. These unusual pay periods aren’t covered in a company’s budget often, which can lead to possible cash flow problems down the line. This con could be fixed with a matter of budgeting of course.
Reviewing the details above should help your company decide on a payment timeline that works for all parties involved. Taking into consideration the number of pay periods per year is also helpful in determining the type of payment schedule your business needs that can benefit employees as well. No matter what changes are made to the timeline of payments, the most crucial part is letting employees know beforehand. Part of becoming an established business is building a foundation of trust with employees to ensure productivity, engagement, and of course, efficiency.
