Confused about choosing the best pay cycle for you? Read this

Determining how and when employees will be paid is absolutely necessary. The good days after holidays are paydays; believe it or not, your employees do wait for the payday. No matter how goal-oriented and dedicated they are about their work, the reality is they expect a reward for the hard work they put into the company. And there is nothing wrong with expecting compensation for the hard work; as such, setting up a payroll system at an early age is vital for employees and businesses.


Before choosing which pay cycle is best for you, let us understand what pay cycle is


What is a pay cycle

A pay cycle is a term used to describe the frequency that an employee is paid for their work. It is also known as pay schedule; the pay cycle considers the period of time an employee worked, and the payday is the day when employees will be issued with the payment. The pay cycle helps employees generate stubs using a check stub maker and ensures that they are paid for their work in a predictable manner.

Employers can consider different types of pay cycles and set the cycle on their own if not directed by law.



One of the least common pay cycles is daily, which is issued at the end of each workday. A daily pay cycle might be beneficial to an employee who is less financially established and may have to cover the expenses. However, the daily pay cycle might not be beneficial to many businesses.



As the name suggests, the weekly pay cycle is paying employees at the close of every week. This cycle is less frequent compared to the daily cycle. This cycle may benefit hourly employees or employees with irregular schedules, or even freelancers.




A bi-weekly pay cycle means that employees will be paid every two weeks. Paychecks will be issued on a predetermined day of the week. And as there are 52 weeks per year, and not every month will have four weeks, two months will include a bonus pay period. This may be beneficial to employees but can be difficult for businesses as they have to deal with irregular bonuses, accounting, and reporting.



Although it sounds like a bi-weekly cycle, there is a difference in both types. In semi-monthly, instead of issuing paycheck every second week, employers issue paycheck twice every month, no matter how many full weeks there are in a month. The pay date may be the 1st of the month and the 15th or 15th, and the end of the month. This cycle is beneficial for salaried employees.



Employees are paid at the end of every month in the monthly pay cycle. Most businesses or employers find this cycle cost-effective and energy-saving with only 12 pay periods to be taken care of per year.


Choosing the right pay cycle

Pay cycles have a big impact on your business, significantly affecting employee satisfaction rates, recruitment, and retention. It also affects ongoing business expenses and overall net income. Here are some considerations you must take before choosing any cycle for the organization.


Payday laws

Most pay periods are determined by the area in which you do business. While some states have no specified pay periods rules, others adhere to laws that dictate when an employee should be paid, what kind of employees have regulated paydays, and if there are any exemptions.




Employee type

As said previously, salaried employees benefit semi-monthly while hourly employees prefer more regular paychecks. Before deciding the pay cycle for the organization, review the types of employees you have in your organization.



The various tasks and management roles associated with payroll have their own costs. If the payment is frequent, the cost may add up. When deciding the pay cycle, make sure you check your budget as it may hurt your business really hard.




Another important reason to consider while deciding the pay cycle is cash flow. With a weekly pay cycle or daily cycle, you must have to fill accounts as you do not want to empty your account in this case. You can select a pay schedule when you are sure that you have enough in account and regular paydays will not affect the business.



According to the federal rule, overrated must be calculated on a weekly basis, even if you are following a monthly, weekly, or bi-weekly cycle. Businesses that need to account for large overtime may be better suited with a weekly pay cycle. You can always choose

free pay stub template to generate accurate stubs, including overtime.


The right pay cycle for you and your employees

In a nutshell, choose the cycle that best suits your business. Consider all the factors and then decide the cycle. Also, make sure your employees are equally happy with the pay cycle as the cycle will motivate them and help them generate stubs easily using a free pay stub generator.

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