A bi-weekly payroll is when an employee is paid every two weeks, or for every eighty hours he or she works. There are many reasons why a company would rather do a bi-weekly payroll than a weekly one. Before deciding to change the payment schedule, look at the advantages of the bi-weekly payroll.
One of the most frustrating departments in any company is the payroll department. Even if the company has less than fifty checks to hand out each week, mistakes can be made. There are instances where the hours are not recorded correctly and the employee not getting an accurate pay. Even one mistake, can set the payroll activities behind for the next pay cycle. The main advantage of having a bi-weekly payroll is it gives the accounting department more time to catch mistakes and fix them before the pay checks arrive.
Bi-weekly payrolls help reduce administrative costs. The payroll department spends less time preparing the payroll than a weekly system. Even though accountant’s job is cut in half in comparison to the weekly payroll, this actually gives him more time to check for mistakes and fix them before the payroll is due.
The bi-weekly checks are easier to track and control. With the weekly payroll, there may be ten employees who spot a mistake on their checks. The accountant will have to take phone calls, research through the documents and return phone calls. Sometimes, this cycle will have to repeat itself several times until everything is fixed. A bi-weekly payroll will lessen the administrative side of fixing the checks.
The employees get a larger pay check each pay period. This allows the employee to set aside a budget more effectively for household bills. For example, if an employee makes $300 a week and has a $500 mortgage, a bi-weekly pay check will be beneficial to him. He would get $600 every pay period, where he can pay the mortgage more effectively. Too often, when somebody tries to save money, it gets spend on unnecessary purchases.
There will be extra pay checks during some months. By getting paid every two weeks, the employees will see two checks each month. However, on certain months, they will see three checks. If they changed their personal budget to fit in with the pay cycle, this extra check can be used to buy something, go on vacation or to go into a savings account.
Payroll deadlines are easier to meet with a bi-weekly payroll. For example, if a company has a weekly payroll and the pay-date falls on a Thursday, the payroll department must have the time sheets turned in, usually, by the end of Monday’s workday. With a bi-weekly pay system, the payroll department only turns in the accounting information twice a month. Usually, these days fall in the middle of the month and at the end.
Managers may consider switching to a bi-weekly payroll. With the many advantages to both the company and the employees, this will help reduce administrative costs and time in preparing the payroll. This will give more time to concentrate on the company’s main operations.
