How businesses pay their employees in 2020 shouldn’t be the same as how they paid them in 1990, and yet, it is. Now there’s a new, much better payroll trend companies are using to fund their staff: Offering employees earned wage access.
Simply put, on-demand pay is a financial wellness practice that empowers employers to help their workers avoid high debt and banking fees, as well as late payments by allowing them access to a portion of their earned wages up front. On-demand pay gives workers access to funds they’ve already earned during that pay-cycle, meaning they’re no incurring additional debt, and they can use these funds to access necessities or deal with unexpected expenses.
Earned wage access comes with a host of other benefits for both businesses and employees, alike. Here’s a rundown on the five major reasons you need to incorporate on-demand wages into your employee compensation program.
Wages On-Demand Helps Workers Avoid Predatory Lending
Offering your employees on-demand wage advances is crucial to helping them to avoid things like payday loans, the most prominent form of predatory lending. This payroll feature can save workers from shelling-out, in some cases, hundreds or thousands on interest fees accrued from high-APR loans.
On-Demand Wages Helps Combat Overdraft Fees
There are few things more financially problematic than overdraft fees. Did you know the average overdraft is $33 but it's triggered by a $24 transaction? By offering on-demand wages, companies can help employees avoid this vicious cycle of compiling overdraft fees by letting workers get their bank accounts squared away—ASAP.
They Help Employee’s Maintain (or Improve) Their Financial Wellness
Roughly three-quarters of the entire US workforce lives paycheck to paycheck, hindering people’s ability to garner any sense of financial wellness. Offering on-demand pay, which are part of the wages employees have already earned, helps reduce stress and improve financial well-being. In addition, research shows that employees who feel financially stable at their jobs have increased levels of productivity
They Can Make Employees Stick Around Longer
One of the most common reasons employees leave any one job is due to a lack of financial fulfillment. Studies actually show that paycheck stability more than increased income is what people prefer. Giving on-demand access to their earned wages is a fantastic way to maintain (or improve) employee retention.
On-Demand Wages Save Employers, Big Time
More than 13% of employers issue paycheck advances on a regular basis. The benefits of giving staff early access to their wages through a third party provider can also greatly benefit the employer. From saving on everything from payroll and staffing costs to time spent mulling through paperwork, companies can come out ahead just as much as their employees when adopting on-demand wage advances.
How ZayZoon Comes into the Picture
ZayZoon is a financial technology (FinTech) company on a mission to improve employee health through the use of responsible financial products. Through partnerships with payroll and employers, ZayZoon gives employees access to their earned wages, well before payday, to save them money, reduce their stress, and improve their levels of engagement.
To learn more about how ZayZoon can help you get access to on-demand pay, click here.