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ToggleFor employers, workers, and independent contractors, it’s a must to understand different pay cycles as semi-monthly and bi-weekly payroll. Here’s a debate between the two to find out which one is worth opting for.
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Different organisations opt for different payroll cycle lengths, which can be anything between a week and a month. Weekly, bi-weekly (every two weeks), semi-monthly (twice a month), and monthly are a few popular payroll cycles that organisations proceed with. Globally, most of the organizations prefer to go with monthly payroll cycles. Most countries in the EMEA and APAC regions are paid out every month.
However, employers in the United States, Mexico, and Canada often opt for a semi-monthly vs bi-weekly payroll cycle. Bi-weekly payroll is more common in fast-paced, shift-based industries such as healthcare and hospitality domains.
Let’s help you unfold the differences between Semi-Monthly vs Bi-Weekly Payroll cycles and find which one aids in better cost control. Read in full as we will unfold the benefits of a Semi-Monthly payroll system and bi-weekly payroll system.
Let’s first understand how these terms are different:
Semi-monthly payroll is when the salary is disbursed twice a month. Meaning, that a salaried in-office or field employee will receive 24 paychecks (instead of 12) during the financial year. Many companies have fixed days like the 1st, 15th, or 30th of the month to process the payroll.
Method of Calculating Bi-monthly Payroll
To calculate an employee’s bi-monthly salary, divide their annual salary by 24 paychecks. For instance, if that employee makes an annual net salary of $50,000, then every month they will receive 2 paychecks of $2,083.33 (50,000 ÷ 24 = $2,083.33). |
Bi-weekly payroll is when the salary is disbursed to employees every other week. Many companies choose this pay cycle and disburse salaries, typically on Friday. This leads to a total of 26 paychecks per year.
Semi-monthly vs bi-weekly payrolls, the popular and most commonly used payroll schedules differ in the following aspects:
Semi-monthly payroll is beneficial for product and service firms and white-collar or salaried employees in the following ways:
➼ Note – Companies should choose a bi-monthly salary payment schedule only when it aligns with the company’s goals and is feasible on the employees’ part.
When companies opt for a bi-weekly payroll system, they experience:
Factors like company preferences, cash flow considerations, and employee preferences are important choices between semi-monthly vs bi-weekly payroll. Some employees may prefer the more frequent paychecks of a bi-weekly schedule, while others may appreciate the consistency of a semi-monthly schedule.
Manage them with Trackofield’s Payroll Management System
Managing and processing payroll for a diverse workforce based on above pay cycles can be a nightmare! TrackoField brings smart payroll software that automates complex calculations for hourly, salaried, and commissioned employees, including overtime, differentials, and bonuses – regardless of their schedule.
Stop wasting time with spreadsheets and ensure error-free payouts. and see how easy payroll calculation can be.
Understanding the differences between semi-monthly and bi-weekly payroll cycles is important for companies and employees alike. Semi-monthly paychecks offer consistent payouts and ease of budgeting, whereas bi-weekly paychecks ensure your employees get frequent payouts, which leads to better cash flow management and more scope for savings. However, businesses always have the liberty to choose between these payroll cycles depending on their organizations’ specific needs and preferences of their workforce.
If you are looking for payroll software that accommodates and adjusts according to your desired pay cycles and pay rates, TrackoField is the name to believe in.
Get a free trial to learn how our software can help you automate payroll processing tasks.
Both semi-monthly vs bi-weekly paychecks are good in their place. However, bi-weekly paychecks provide almost 26 paychecks per year, which gives employees a chance to save more money during certain months.
Choosing between the two can depend on your business’s specific requirements. You can choose Bi-weekly payroll to want diverse, consistent paychecks and ensure semi-monthly payroll when you want to disburse less frequent paychecks while potentially addressing budget constraints.
Nandita is the Team Lead for Content Marketing at TrackoBit, bringing over a decade of experience in B2B, B2C, and IoT sectors. She has a proven track record of helping software companies evolve into ...Read More
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