Bi-weekly Payroll vs Monthly: Which is Better for Your Company?
When you’re setting up your payroll schedule and choosing a software provider to manage it, one of the first decisions to make is how often to run payroll. You might have to decide between biweekly and monthly payroll.
For employees, the amount they receive per paycheck will vary depending on the payroll schedule, but their total yearly income will remain unchanged. For your business, how frequently you should issue paychecks depends largely on the composition and expectations of your workforce. As you are deciding which payroll schedule is most suitable for your company, here are a few things to consider.
Running payroll every two weeks – issuing 26
paychecks a year – works well for most companies. Not only does it allow
employees to better manage their own budgets and expenses, but also brings
consistency and predictability to their finances.
There can be disadvantages to the bi-weekly
payroll schedule as well. Since it doesn’t coincide with calendar months, it
can be difficult to keep track of paydays and pay periods. It also means that
sometimes payroll gets run three times in one month, which can pose a challenge
to your monthly operational budgets (although it’s highly welcomed by employees).
Processing payroll once a month (12 times a
year) has its own pros and cons. While paychecks will arrive on a different day
of the week each month, this payroll schedule ensures that income will be
received by a specific date (as opposed to every other Friday, with bi-weekly
Employers save money with monthly payroll
schedules since they only need to process 12 times per year, as opposed to 26.
Not all workers like to get paid once a month, though, so this payment schedule can put a strain on employee finances; especially for employees who are accustomed to a bi-weekly payment schedule.