Provide instant access to wages to help you and your employees
As the cost of living rapidly increases, it is estimated that 8 in 10 people are living paycheque to paycheque each month.
There is an ever-expanding focus on financial wellbeing as well as overall mental and physical health.
With that in mind, a solution that represents the next evolution of payroll has been brought to the market: on-demand pay.
This solution offers managers a way to empower employees and improve both productivity and retention.
Today’s post will cover what you need to know regarding on-demand pay, its benefits, and how you can implement it into your business.
What is on-demand pay?
Also known as ‘earned wage access’ (EWA), or ‘instant pay’, on-demand pay allows employees to end a shift and—if they wish to—get paid instantly.
The emergence of supporting technological solutions for this means that employees can track and withdraw their wages anytime and anywhere with ease.
For an employer, cashflow will not be disrupted as individual payments can be processed as part of payroll.
Equally, a third-party provider can front the money as a zero-interest loan that the employer can then pay back during normal monthly payroll.
As a result, on-demand pay seemingly brings payroll into the 21st century.
What are the benefits for employees?
Empowering employees by offering financial flexibility, on-demand pay provides many advantages for those who need it most, the effects of which are enormously positive for both the employee and the employer.
Minimise stress over personal finances
The majority of people will experience some form of stress over personal finances at some point in their lives.
What’s even more worrying is that, ahead of other categories such as jobs, relationships or health concerns, 54% of people found financial or money challenges to be the cause of most stress.
This underlines the need for a stress-reducing, individual empowering system such as on-demand pay.
Utilising on-demand pay ensures that the financial wellbeing of an individual is improved, allowing them to increase control of their finances and in turn minimising any unnecessary stress.
Reduce dependence on high-interest payday loans
For individuals who experience stress or difficulty regarding personal finances, many resort to taking out high-interest payday loans simply to make ends meet.
Those needing to keep up with mortgage or rent payments or pay other essential domestic bills then find themselves with mounting debts.
The ability to withdraw earned funds, as and when necessary, with on-demand pay means that employees can limit the dependence on payday loans.
This in turn helps them to improve their credit score, grow savings for emergencies, and gain further control of their financial status.
What are the benefits for employers?
The benefits of on-demand pay do not simply stop at the employees. There are many advantages for employers which have resulted in numerous corporations—such as Walmart—to implement on-demand pay.
Attract new employees
In a post-COVID world, small- to medium-sized companies can potentially struggle due to the tight labour market. However, 79% of people would switch to an employer who offers on-demand pay.
Therefore, implementing the no cost benefit of on-demand pay provides a competitive advantage for shift-based industries and can be what distinguishes your company in the eyes of a prospective employee.
Attracting many more individuals can therefore give you, as an employer, a larger pool of candidates to pick and choose from when it comes to recruiting.
Increased worker satisfaction and productivity
Providing your employees with on-demand pay demonstrates that you value the wellbeing of your workforce.
This will increase the trust between employee and employer, resulting in heightened work ethic, increased job satisfaction, better engagement, improved productivity, and reduced absenteeism.
In fact, 89% of people would work longer for an employer who offers on-demand pay, thus reducing employee turnover and building a better company culture.
How to implement on-demand pay into your business
Numerous new businesses are emerging to aid employers to implement on-demand pay, usually through a third-party provider, or an app system that is integrated into your payroll.
As payroll can often be a big drain for small businesses, there are some approaches you can take when implementing on-demand pay to manage the situation to benefit both employee and employer.
For example, only making on-demand pay available to those who have completed their probation period or ensuring that employees commit to a set amount to avoid a significant unexpected pay out.
Such steps can ensure that on-demand pay is implemented into your business with ease as you assist the next evolution of payroll.