Different Pay Schedules for Your Business

Different Pay Schedules for Your Business
Choosing a pay schedule is an important decision for business owners. Here are four common pay schedules, and how they'll impact your business, cash flow, and employees.
by Sydney Cohen Sep 15, 2020 — 4 min read
Different Pay Schedules for Your Business

Please note that this article is intended for educational purposes only and should not be deemed to be or used as legal, employment, or tax advice. For guidance or advice specific to your business, consult with a qualified tax and/or legal professional.

When paying employees, an important decision you’ll need to make is your pay schedule. Matching your pay schedule with your team’s needs can give employees more control over their finances, and it can also help increase retention.  

There are four common pay schedules to choose from, and you’ll want to take into consideration how each will affect your business, your cash flow, and your employees. 

What is a pay schedule? 

A pay schedule is a combination of two elements: 

  1. Your pay period: The period of time in which your employees work to earn wages. 
  2. Pay date: The date your employees receive a paycheck. 

The time between the end of the pay period and the pay date is called “paying in arrears.” Here is an example of what this looks like. 

If your pay period is from July 1–July 7, and your team receives their earnings on July 13, then the pay period is July 1–July 7, July 13 is the pay date, and the time in between is paying in arrears. 

Different pay schedules 

There are four different common pay schedules: 

Weekly pay schedule 

A weekly pay schedule is when employees are paid every week on a consistent day of the week (e.g., pay date is every Friday). This pay schedule requires you to run payroll the most frequently: 52 times per year.

This can incur some additional manual work for you, unless you have a payroll provider that makes timecards and tip importing simple and easy. However, weekly pay schedules are popular with employees as they receive paychecks more often. 

Biweekly pay schedule 

A biweekly pay schedule is when employees are paid every other week on a consistent day of the week (e.g., every other Friday).

While this means you’ll run payroll less frequently, it also means there could be some months employees are paid three times rather than four because of the way your pay dates fall.

Semimonthly pay schedule 

A semimonthly pay schedule (not to be confused with a biweekly pay schedule) is when you pay employees twice per month on specific dates (e.g., on the 15th and last of the month).

This means you’ll run payroll slightly less frequently, and your employees will be paid on a predictable schedule in terms of dates each month. A semimonthly pay schedule can sometimes align in a way that helps employees pay their bills that might be due on a similar cadence. 

Monthly pay schedule 

A monthly pay schedule is when you pay employees once per month on a specific date every month (e.g., the 20th of each month). With this pay schedule you run payroll the least often: 12 times per year.

However, this can be difficult for employees as they will receive pay infrequently. Monthly pay schedules are particularly challenging for hourly employees who may not have paid time off or consistent schedules. Because this pay cadence is the most difficult for employees, it has the potential to affect your ability to recruit and retain talent as well.

Impact of your pay schedule on your cash flow 

Your pay schedule is mainly affected by the pay period and the pay date, however, the time in between the day you run payroll and the day your employees actually receive their funds should also be considered.

The pesky part about that period of time is that the funds for payroll are debited from your account the day you run payroll, but your employees likely won’t receive it (if you’re using a standard payroll service) until up to four business days later.

This delay occurs because it takes several days to move money from one bank to another due to the limitations of a financial system called ACH, which stands for Automated Clearing House. ACH payments allow you to transfer money from your bank account to your employees’ accounts instead of having to resort to cash, checks, or wire transfers.

Because of the delay, it can be hard to accumulate all the funds you’ll need to run payroll on time. For example, if you want to pay your employees on a Friday, you’d have to run payroll on Monday. This can be difficult if you need more time to accumulate enough cash to make payroll.

When you run payroll with Square Payroll, you no longer need to submit payroll four days in advance. Simply process payments with Square and those funds will accumulate in your Square Balance. Then enable Instant Payments to pay your team faster. With Instant Payments, your Square Balance becomes the funding source for paying your team. You can submit payroll in as little as one business day prior to your employees’ pay date. Because we can move the funds faster by transferring money directly within Square, you won’t need to wait for delays caused by transfers between banks.

When you use Instant Payments, your team will receive their pay as soon as the next business day with direct deposit. If your employees receive their pay in Cash App, Square’s peer-to-peer payments app, they’ll receive their pay instantly, even on weekends and holidays.

With payroll being one of your largest expenses, Instant Payments can help alleviate your payroll burden. Now you can choose your pay schedule without having to factor in multiple days between running payroll and your employees’ pay date. With Instant Payments, the funds are released up to one day before payroll, letting you hold on to your money longer.

Impact of your pay schedule on your employees 

Pay schedules can have a material impact on the way your employees manage their finances. As their employer, they rely on you for financial security and cash flow. You may choose to pay them every two weeks, but employees incur expenses every day.

Instead of waiting for their next paycheck, eligible employees can transfer up to $200 of their earned wages to Cash App for free, or to a linked debit card for a small fee of 1% of the amount of the transferred funds. Having faster access to their earned wages helps employees buy necessities, pay bills, and avoid overdraft fees. It can also help you as an employer to attract and retain a great team. 

When your eligible employees clock out, they’ll receive an email with a summary of their hours worked and wages earned for that shift, along with the amount of funds they are able to access early.


Sydney Cohen
Sydney Cohen is Content Manager for Square Payroll. She writes about hiring, tax compliance, management, and of course payroll.


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