Why Earned Wage Access is the Key to Employee Financial Well-being
In a recent survey, 61 percent of employees in the U.S. said that they would rather not wait for their scheduled payday to access earned wages. In addition, 74 percent of employees also said that they would prefer to work for an employer that offers financial planning tools.
As the business world moves forward amidst the COVID pandemic, on-demand pay is becoming an increasingly important part of the employment landscape. More and more businesses worldwide have started to introduce useful, easy-to-manage platforms for their employees to access their wages in real-time. This includes HR departments in large corporations as well as payroll companies, professional employer organizations, and workforce management companies.
For many, these earned wage access tools have come to represent ideal options for employers when it comes to increasing employee retention, offering a competitive recruitment tool, and supporting financial well-being for their workforce.
Despite the current economic climate and growing employee interest in on-demand pay, many businesses are still unaware of earned wage access or, for a number of reasons, may be hesitant to introduce this new payment option to their employees.
Whatever the reluctance around earned wage access may be, the benefits for both the employer and employee are real and impactful. And as the HR technology landscape continues to evolve, fintech providers and innovators are offering a modern payday alternative that bolsters employee well-being while meeting key objectives for businesses and organizations.
Help Employees Avoid Payday Loans and Cycles of Debt
Earned wage access platforms combine modern payment technologies with intuitive usability. The platforms, which can be integrated into a native payroll application or used as a stand-alone app, give employees access to their wages before their designated payday and manage their finances simultaneously.
A good example is that by having the ability to pay expenses on time, employees avoid crippling late fees which can negatively impact their financial health. And with nearly 78 percent of the U.S. population living paycheck-to-paycheck, having hard-earned money when it is needed most can alleviate stress, allowing an employee to avoid the descent into payday loans and other ruthless lending options.
By avoiding unnecessary financial strain, employees can eliminate cycles of debt while putting more focus on improving their life. This includes being more focused at work, being less likely to seek another job, and having strong attendance and productivity rates in their current position.
Earned Wage Access Lets Employees Budget Better with Savings and Bill Pay Tools
The reality is that having to depend on loans or credit cards just to make ends meet can quickly result in a lack of motivation within a job. The connection between financial well-being and work ethic is clear, and on-demand access to earned wages could be the deciding factor between someone remaining in a role or voluntarily leaving it.
With this in mind, some earned wage access providers offer budgeting tools. A focus on integrating workforce management, payroll, and personal accounting solutions is extremely important when it comes to on-demand pay as well. Some solutions offer a savings account on their app which employees can use to put aside small amounts of earnings each month.
Alongside this, some providers also include both spending and fraudulent activity alerts which warn employees when they are spending above their chosen limit and flag any unusual activity on their account. Such inclusions show how far earned wage access companies are going to assist employers and employees, and build solutions for long-term financial well-being.
Employers Can Offer Perks with Company-Wide Benefits
Going even further, employee perks are another very useful addition to earned wage access platforms. Companies can provide discounts that can be accessed through the on-demand pay platform or native payroll app. This can include benefits such as savings on in-store and online purchases. The combination of on-demand wage access and discounts can save employees money in the long run. Plus, the knowledge that their employer cares about their finances and personal well-being is crucial when it comes to employee satisfaction and retention.
It is clear that earned wage access platforms are proving that the longstanding view of regular pay cycles is shifting and on-demand pay is here to stay. The benefits they provide for both employer and employee are significant.
By addressing pay-cycle struggles, employers, HR professionals, payroll companies, professional employer organizations, and workforce management companies can show everyday working people that they are valued and that they are here to help build a foundation for financial stability in an uncertain economic climate.
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