Question

Which of the following is not a disadvantage of the direct deposit system to the employer?

A. Direct deposit is not a paperless system
B. Cannot dictate the bank that the employee uses
C. Do not have to file/store cashed checks and related documents
D. Loss of interest on payroll funds before paychecks clear

Answer 1

Direct deposit can result in a loss of interest on payroll funds before paychecks clear.

Step-by-step explanation:

One of the disadvantages of the direct deposit system to the employer is D. Loss of interest on payroll funds before paychecks clear. With direct deposit, paychecks are electronically transferred to employees' bank accounts, which means the employer loses interest on the funds that would have been held in the company's account until the employees cash their checks. This can result in a loss of potential earnings for the employer.