Did you know that U.S. gross domestic debt is the highest in history? If you run a business, you probably understand how much your workforce struggles to make ends meet.
It may not always be possible to increase their wages, but there are other ways you can help. One way to help your employees is to offer more financial liquidity.
Read on for our must-know guide for on-demand pay, and find out how it can help your company.
On-demand pay is a service that allows employees to receive their payments as and when they like. They can decide to take out pay one day at a time, or back up pay and take it all out in one large amount. This allows them to take out wages earned so far before their next scheduled pay date, be it monthly or fortnightly.
This creates a culture of earning wages as you work the hours. Very often, limits or periods are set, so that only a portion of the net pay can be accessed before the next payday.
To implement on-demand pay services, an employer must first sign up with a company. This company will have their owns methods of working.
Some companies send out a message to mobile phones once the person has finished their shift. This is not necessarily best practice because it puts cognitive pressure on employees to take money before payday even if they didn’t need it.
Some services allow employees to access their earned wages when they want. For example, even if the company pays them every two weeks, they may decide to be paid weekly or every few days. With On-demand Pay, they can access they earned money anytime and get the remainder on the scheduled payday.
Allowing quicker payments and easier access to wages allows more freedom for your employees. This helps them to manage their money better. It can mean they can pay bills instantly and can save and spend on their own schedule.
In cases of extra shift work, it means that employees have access to the extra money they have worked for. Overtime can often take a long time to pay out, way after the employee has worked and needs the money. This instant access helps them manage finances and can help them avoid debt.
For employers, this can translate into a happier workforce. By giving your staff more flexibility with on-demand payments, they will face less distraction from money worries and troubles. In fact, as many as one in four employees admit to neglecting their work or being distracted because of financial problems.
This can translate as you caring more about their wellbeing, making them more productive and loyal to the company. This will increase retention among your staff, as people may be less willing to move on to other places where they have fewer incentives in the workplace. It can also help you attract better quality staff, as it shows you offer more perks and flexibility.
If a provider requires your employees to withdraw earned wages after every shift, this can add up as a cost for employees. It’s important for you as the employer to understand the cost to your employees for such a service. For instance, does the provider charge for daily pay? do they offer a free / no fee model for On-demand pay?
For employers, the cons are mainly administrative, though even these are minimal. Employers must agree to provide time and attendance data to the service provider and apply a payroll deduction before processing payroll. Payactiv has this automated with API integrations with all major Time, Payroll, and HCM providers.
An on-demand pay service is a huge benefit to both your company and its employees. However, when finding a service, there are a few considerations that you should make.
The first is the amount that companies charge in fees. If users are charged a fee for daily pay, it can add up very quickly. This can act almost like a payday loan, placing your employees in precarious financial positions that have been facilitated by you. For this reason, Payactiv provides two models that users can choose:
On-demand services work best together with good financial management, and that’s why the Payactiv app includes free budgeting and savings advise by phone appointments, discounts on everyday items like gas and prescription medicine, and a savings tool.
Aside from the points made above, on-demand payments are helping many industries modernize their employee payment methods. In a world where banking and transactions can be done immediately, payroll should not lag behind. A two-week payment model is no longer viable for everyone.
One industry that suffers from a very high turnover is the hospitality and restaurant trade. Companies in this sector have been using these services to keep staff, increasing their retention rates. This has all been done without increasing the operating costs of their business.
When looking for on-demand pay advisors, shop around for quotes. See who offers the best rates and services for both you and your staff. You need a company that works for you, not the other way around.
Your first stop should be Payactiv. As well as on-demand earned wage access, we have a host of awards and a financial wellness package. Contact us here to learn more about Payactiv and put the financial power back in the hands of your employees.