Financial Accounting
Direct deposit is an attractive method for corporations to use in paying employees as companies can control the timing of withdrawals from company bank accounts. In other words, every payroll day would show withdrawals from a company's bank account for each employee paid by direct deposit. The alternative to direct deposit is that companies would have to more closely monitor their company bank accounts after every payroll day, as some employees may take several days longer to cash or deposit their paychecks, and the amount within a company bank account would not necessarily reflect the amount remaining after each employee is paid. However, direct deposit simplifies payroll procedures only for those employees who choose to be paid by direct deposit. But what if certain employees still prefer to receive traditional paychecks? To further simplify payroll procedures, larger companies may choose to create special payroll accounts, from which these companies would issue regular checks or directly deposit funds in employees' accounts, depending on employees' preferences. Regardless, larger companies often prefer using payroll bank accounts because these companies can essentially use one check or one electronic transfer of funds from regular company accounts to payroll bank accounts, from which each employee would be paid. This separate payroll account allows a company to more easily reconcile transactions in a regular company account, because each payroll day shows up as one withdrawal from the regular account that is deposited into a payroll account.

Source: K. Larson, J. Wild, and B. Chiappetta, Principles of Financial Accounting (New York: McGraw-Hill/Irwin, 2005), p. 446.