BenefitMall is thrilled to now be able to offer an on-demand pay solution to our clients. We partner with an industry-leading company that makes providing this benefit to your employees easy, efficient, and cost-effective.
What is on-demand pay? It is a program that allows employees to access all or a portion of their pay within days of completing required shifts. Just as an example, your company might allow employees to receive 50% of their pay for any shift worked beginning on the next business day. Employees access their pay with a companion mobile app.
We would be more than happy to explain how all of this works if you're interested in offering on-demand pay as an employee benefit. In the meantime, here are five reasons we think every employer should have it on the table:
1. It Promotes Financial Wellness
A January 2019 report from Forbes senior contributor Zack Friedman indicated that some 78% of American workers live paycheck to paycheck. One of the results of living that sort of lifestyle is a lack of financial wellness. People are so stressed out just meeting their financial obligations that it impacts nearly every area of their lives.
We employers have contributed to this problem by shifting away from weekly pay in favor of biweekly or semimonthly pay. We're expecting employees to wait longer to get the money they have earned, adding to the stress they already experience. We can change that, and promote financial wellness at the same time, by offering on-demand pay.
2. It Reduces Dependence on Payday Loans
Despite what you may have heard, payday loans are not limited to low income earners. Data shows that payday borrowers cover a full range of demographics. The average borrower makes in the neighborhood of $30,000 annually. Borrowers take out payday loans because they have expenses to meet between paydays. On-demand pay reduces the need for these loans by giving workers access to their money when they need it.
3. It Reduces Overdraft Fees
Among those who do not use payday loans to meet expenses between paydays, all is not necessarily well. Some people rely on the overdraft service attached to their checking accounts. This isn't any better as overdraft service costs money. Said costs can be reduced or eliminated with on-demand pay.
4. It Promotes Loyalty
Happy employees are loyal employees. On-demand pay works to this end in a couple of ways. First, having access to pay between paydays reduces employee stress by helping them better manage their money. Second, employees consider on-demand pay an extra benefit. They tend to be more loyal when they perceive that their employers care enough about them to offer benefits.
5. It Eliminates Employer Cash Advances
Though the majority of America's employers don't make cash advances on a regular basis, more than 10% do. That's okay, but it creates additional accounting requirements and interrupts the company's cash flow. Offering on-demand pay achieves the same thing without creating any additional work or eating into cash reserves. If your company is already offering cash advances, it makes no sense to not offer on-demand pay.
Society is changing all around us. Many of those changes are good, including the emergence of on-demand pay. We firmly believe this is a benefit every employer should be offering. On-demand pay encourages financial wellness, helps employees better manage their finances, helps avoid things like high interest loans and overdraft fees, and makes it possible for employers to help their workers out without any additional effort or financial obligation. What's not to love?