There’s more than one pay schedule you can use to pay an employee? But which one is right for you?
In this article, we’ll talk about one of the most commonly used pay schedules, biweekly pay.
What Is Biweekly Pay?
Biweekly pay is when a business pays its employees every other week on specific days of the week. For example, paying your employees on the first and third Monday of every month is an incredibly common biweekly payment strategy. With 52 weeks in a year, that means your employees can expect to receive a total of 26 paychecks in a given calendar year.
Of course, there are different ways to pay your employees, but biweekly pay is by far the most popular payment method. In fact, 36.5% of businesses in the US pay their employees using the biweekly pay schedule.
Biweekly Pay Vs Bimonthly Pay
So what’s the difference between a biweekly paycheck and a bi-monthly paycheck?
They sound kind of like the same thing, don’t they? After all, most months have roughly four weeks in them? So what’s the real difference?
The difference is when people can expect their paychecks.
As we already explained, a biweekly paycheck could make it to your employees’ bank accounts on the first and third Mondays of the week. That biweekly paycheck is tied to a specific day of the week.
A bi-monthly paycheck is tied to an actual date instead of a day. For example, if you pay someone bi-monthly, you may pay someone on the 1st and 15th. It’s a slight nuance, but it makes a difference. For example, what happens if the 15th is a Sunday? You’ll need a specific policy that says your employees should expect to be paid either the day before or the day after.
Those pay policy nuances might make paying your employees a bit more complicated, but it’s also probably easier for your accountant to keep track of incoming and outgoing expenses as they don’t have to go back and forth figuring out what numerical date this month’s paydays fall on.
Which Industries Use Biweekly Pay?
A ton of different industries use the biweekly pay schedule.
Here are some of the major industries that use biweekly pay.
- Health services
- Leisure and hospitality
- Information services
This list looks short, but think of all the business this includes. Public schools, colleges, hospitals, doctor’s offices, physical rehabilitation facilities, restaurants, bars, hotels, daycare centers, call centers, digital marketing companies, tech companies and more, are all included in this list of industries.
What Are The Benefits Of Biweekly Pay?
There are many different benefits to using a biweekly pay schedule. And the benefits aren’t just one way.
Here are some of the benefits of biweekly pay for employees.
Easy to plan a budget
Most people don’t think in terms of every 10 days or the 3rd of every month. They think in terms of “I have to do this on Tuesday.” Creating a biweekly pay schedule helps your employees plan out their finances and needs in a way that makes more sense to them.
Knowing when they’ll get paid, and being able to understand their financial timelines, creates an added sense of security in the lives of your employees. Employees value that kind of security. And while you could easily create a bi-monthly policy that “Every time a payday lands on a weekend, you’ll get your paycheck a day early,” the small difference to biweekly pay still feels like a big difference.
Here are some of the benefits of biweekly pay for your HR employees.
Reduces payroll errors
The fewer exceptions there are to pay dates, the fewer opportunities there are for HR or accounting to make a mistake when paying people. Automating incoming and outgoing sources of cash (in both a figurative sense like pay schedules and a literal sense like automation software) makes life so much easier for your employees charged with watching your money.
Overtime is easier to calculate
Biweekly pay schedules are great if you have employees who get paid overtime because biweekly pay overtime pay is so much easier to calculate when the pay dates are immovable.
Saves money if you switch payroll providers
Let’s say you’re working with a payroll provider, and they’re helping you pay your employees weekly. Did you know that it’s actually cheaper to pay biweekly? It actually costs less to switch to a biweekly pay schedule or a payment provider that offers biweekly pay instead.
What Are The Problems With Biweekly Pay?
There’s only one real problem with biweekly pay periods.
Evidence suggests that biweekly pay periods encourage more employee spending. Meaning that your employees will probably spend more of their money than if they go paid monthly. That’s because the more instant access to funds feels like they’re receiving more money than they really are.
Unfortunately, those paychecks are also smaller. So while they’re spending more, it’ll feel like they have less. And sometimes they’ll find themselves in a painful lull between paychecks where they may have a large bill, like daycare, that they’re waiting to pay, but don’t quite have all the money to pay it off until that second check is cleared.
This can be a point of stress for your employees and will encourage them to look for a new job faster.
Creating Biweekly Pay Stubs
Need help generating a paystub? Check Stub Maker can help you build out templates and issue pay stubs so you don’t have to worry about the logistics of employee pay again. Come check out Check Stub Maker today!