Electronic remittance program deducts payments from paycheques
automatically, making life simpler for payroll and everyone else
Payroll professionals faced with the headaches of administering third-party payments have the option of using an electronic program that simplifies the process and is now available in most Canadian jurisdictions. The program, called the Third Party Remittance Program, is a service created by ADP Canada, a provider of integrated business solutions including traditional and web-based services for payroll and human resources. The electronic program was initially introduced on a limited basis nearly 10 years ago in response to a growing realization of the burden of multiple third party remittances, said Janice MacLellan, ADP’s director of industry relations.
Third party payments
take a lot of effort and paperwork-
Each third-party remittance, such
as garnished child support payments,
RRSP deductions and insurance payments,
requires a significant amount
of effort and paperwork from payroll.
Certain remittances require multiple
forms to be filled out and once that is
done, a cheque must be requisitioned
from a company’s finance department,
creating a package of paperwork and
several carriers for every employee’s
paycheque that has this type of deduction.
The Third Party Remittance
Program streamlined this process,
enabling information on remittances
to be input electronically for each
employee. Once the information was
input for each employee, all remittances
were automatically deducted
and transferred to the appropriate
party each payday. Electronic records
of the transactions were readily available
for review and the paperwork
and time spent on them by payroll
could be significantly reduced.
First banks and insurance companies
then family support agencies -
When ADP Canada developed its
electronic business data transfer solution,
it approached other partners and
the Bank of Canada signed on for
Canada Savings Bond deductions.
Other early partners included the
Royal Bank of Canada, Standard Life,
and the Ontario Family Support
Office. When the latter signed on, the
program began to be used more for
garnishment-types of remittances in
addition to voluntary deductions.
MacLellan said other provincial
family support agencies began
signing on about two years ago as
more became technically able to
handle the electronic remittance
program. Recently, New Brunswick’s
Family Support Orders Service signed
on, meaning family support payments
can be made and reported on electronically
in most Canadian jurisdictions
except Yukon and Nunavut.
Advantages for all parties -
The system benefits employers,
employees and the beneficiaries of the
remittances, said MacLellan. Companies
and governments are becoming
more environmentally conscious and
electronic remittance of third party
payments falls into line with paperwork
reduction initiatives that many
governments are working on.
“Governments are implementing
online reporting and payment solutions,”
said MacLellan. “It’s a good fit
for government agencies and aligns
with their strategic plans to reduce
paperwork.”
In addition to reducing administration
work for payroll, electronic third
party remittance also enables a faster
timeline for payments. RRSP payments
are invested faster and interest
costs and late payment penalties for
garnishments can be reduced. But
perhaps most importantly, said
MacLellan, social support payments
can get to the recipients faster.
“There’s a positive social impact
for beneficiaries of family support
payments,” said MacLellan. “Kids
don’t get support payments until
agencies receive funds. With electronic
remittance, there’s a quicker
turnaround and the money is sent
more quickly.”
Another consideration is that benefits
and conveniences such as group
insurance are becoming more
popular for employers to offer, which
adds the potential for even more
deductions that will have to be made
from employee paycheques and more
payments to be sent to a variety of
recipients. Utilizing an electronic
process for the increasing number of
third-party remittances would save
payroll a lot of headaches, MacLellan
said.
“We’re hoping to support a trend
for employers to automate, reduce
tasks and improve efficiency,” said
MacLellan. “We want to reduce the
number of manual handoffs and take
advantage of the technology available.”
Source: Canadian HR Reporter June 2009