Businesses have drastically evolved to become torchbearers of hybrid work environments and have ceased to impose a rigid pathway on their workforce.
With remote work taking the high road and employees getting to choose their mode of work, flexibility has become the new normal. When industries everywhere are brainstorming ways to provide immediate access to everything, adaptability has risen to be a commodity, nudging companies to reconsider their traditional payroll methods.
Keeping up with the trend of adaptability, companies have grown to consider incorporating a flexible pay option for their workforce, hence bringing the “Earned Wage Access” EWA or commonly known as Pay On-Demand to the forefront.
Let’s explore the what and how of Pay On-Demand and try to understand its intricacies.
What is Pay On-Demand?
While traditional payroll involves employees waiting for their bi-weekly or monthly pay-outs with wages earned during the previous payroll period, Pay On-Demand gives workers access to some or all of their remuneration as it is earned. Meaning it enables employees to access their earned income before the actual payday. This widens their control over their earned income, as they get to decide when to access it before the next payday.
Why consider Pay On-Demand?
In yesteryear, a salary advance was provided only on account of a private borrowing agreement between the employer and the employee. Which resulted in checking the employee’s credit and required a repayment with interest. These traditional loans were all based on the money they had not earned, hence putting employees at risk of defaulting on the loan.
With the advent of Pay On-Demand, there have been multiple opportunities for employees and employers alike. Let us take a quick look at the benefits it offers to employees:
- Exercise their right to access earned pay: Early wage access equates to a heightened sense of freedom for employees. Which elevates them to manage their finances more effectively as they can now spend money as per their schedule rather than depending on a schedule fixed by their employer.
- Increased financial well-being: With Pay On-Demand becoming a financial guardrail during uncalled expenses, employees are given a more balanced and sound financial status, omitting their need to opt for high-interest loans and money lenders.
- Ensures discretion: Pay On-Demand removes the need for employees to request their manager or Human Resource Administrators for advance pay during times of hardship and instead puts forth a more discrete pathway to acquire funds they are entitled to.
With the benefits overturning the balance towards employees, it is to be noted that employers are benefited to a great extent as well by incorporating Payment On-Demand into their HR and payroll processes. Here are some key benefits that employers reap thanks to EWA:
- Maximised productivity and improved retention rate:
Thanks to EWA, employees foster a less distracted and more productive workplace, as their employers provide them financial flexibility. Financial stress which affects employees’ satisfaction levels, leading to absenteeism and lowered productivity is abolished, making Pay On-Demand a recruitment incentive and engagement tool.
- Fully automated and increased accuracy:
Pay On-Demand is a fully automated initiative that needs minimum intervention and dependence from employers, hence increasing accuracy thanks to advanced technology.
Unveiling the flaws
Despite housing a ton of major benefits for employees and employers, Pay On-Demand can invite a few challenges that need to be understood before adopting it.
Accessing earned income whenever you want can be a double-edged sword. Overusing this potential can disrupt financial planning, with employees abusing the access.
Hence it is vital to follow a more balanced approach where financial knowledge is promoted by setting a reasonable cap on the frequency of withdrawals. This shall benefit both the companies and the employees.
Make the shift and choose Pay-On Demand
Pay On-Demand when implemented correctly, will disrupt business and work experiences for the best. Hence opting for the right service holds more promises for a brighter future.
This post was written by Zalaris. They are an exhibitor on the HRTech247 Payroll, Time & Attendance floor in the technology hall here, and the SAP Partners floor in the Partners Hall here.