Barring some jobs, the traditional pay period is every week or every two weeks. Biweekly is the most common option used by 43% of companies.
This means that you work for two weeks and then receive the compensation for it much later. However, wouldn’t it be nicer to get the money you’ve earned without waiting for it for 2 weeks? If you have ever needed to spend the money you’ve earned right away, you’ll know how crucial a week or two weeks is.
This is where an early pay app comes into play.
An early pay app lets you access and use the money you’ve earned from the shifts you have completed. You can use the app to pay your bills, buy groceries, transfer funds to your bank account, and more. In short, you can get the fruits of your labor right away without waiting for the next payday.
The way it works is that wages your work become available right after a day’s work. You can use the app to track your hours, how much you have earned, and transfer it to your bank with just a few clicks. It’s like getting paid every day, so there’s no need to ask for an advance or take out a payday loan when you need money the most.
If you receive tips and mileage in your line of work, these would also be available to you right away. The POS system of your employer would record the amount you earned through tips that day so that the app can disburse the exact amount to your account.
You can choose not to spend the money or put it towards savings. In which case, you’ll receive your net wage (the money you didn’t use via the app) in your usual salary account or through a savings account in the app. For the money you use, your employer reimburses the early wage access provider, like Payactiv.
That means the app is connected to your company’s payroll and timekeeping systems. Some apps, though, offer early wages to individuals, requiring them to upload timesheets.
An early wage program isn’t a loan. You’ve already earned money, so you have the right to access it. It’s not an advance, as well, as you can’t take out money for work you haven’t done yet. Payactiv calls it Earned Wage Access, but it’s also referred as early pay because you are able to access your money earlier than the usual payday.
Is there a benefit of getting your wage early? As it turns out, early pay access apps help both the employer and employee. Here are some ways it can help you.
Having access to your daily wage allows you to manage your money better. No more running out of money a couple of days after payday, no more skipping meals while waiting for payday, and no more asking for money from friends, paying it back, and repeating the cycle.
Of course, you don’t have to use the money when you don’t need to. Still, you’ll be able to see how much you’ve earned so far. You can then plan your spending according to your anticipated bills.
Earned wage access apps also help you save money. You can save money from late fees, overdraft fees, and interest rates since you don’t have to take out a loan. An app like Payactiv, also has a feature that helps you manage your savings right from the app.
One of the best features of the Payactiv app is paying your bills directly from the app. You can even pay for Uber and your Amazon purchase. It also includes smart budgeting tools and alerts, so you don’t miss a bill. With a physical card linked to your account, you will also be able to buy from any store that accepts a Mastercard or Visa.
Encountered an emergency? Check your account; you may have already earned enough to cover it or most of it.
Because you have access to your wage right away, you don’t have to message everyone you know to spot your cash. You can withdraw and take care of the emergency without any hassle and issue.
If you still need to take out a loan, it will be minimal. Hence, you can avoid high interest rates, as well.
This will also help you avoid the curse of debt. Did you know that all it takes is an unexpected expense of $400 for about 40% of Americans to fall into debt?
Businesses benefit from partnering with earned wages access providers, as well. If their employees are less worried about their financial matters, they can better focus on the task at hand.
Having instant access to their wage can mean life and death to employees. After all, hunger, emergencies, and life don’t wait until payday.
Employers can enjoy better productivity rates from their employees while they don’t even have to exert much effort into offering this benefit. With a good app, companies don’t have to worry about pay advance requests or deal with employment verification calls from lenders. They only have to link their system and pay the provider as they would pay their employees.
Many apps allow employees to sign up even if their employer doesn’t use one. However, it’s easier and better if companies make it a part of employer benefits.
With such a benefit, employees will think twice before leaving a company. Studies have shown a direct impact on turnover rates.
Whether you’re an employer or an employee, it’s worth looking at this financial wellness benefit. It will help you manage your financials better and get you through a tough time.
For more information on how to offer this benefit to your employees, Contact us today, and let us know how we can help.