In our previous post, we examined the reasons behind the rising popularity of wage advance offerings. Wage advance, also referred to as earned wage access, provides employees with on-demand access to wages they have earned before their regular payday.
While still new for many companies, Employee Benefit News says that “the single most important benefit” in a post-COVID-19 world is the ability to offer employees a percentage of their daily wages. This isn’t only due to the positive impact on employees, but the benefits to employers as well.
The Benefits for Employees
Pay on Demand strives to help employees improve their financial health and reduce money-related stress.
Increased Wage Access
According to the Financial Health Network’s FinHealth Spend Report for 2021, 64% of US households were “financially coping and vulnerable” in 2020. And according to the report, low- to moderate-income (LMI) households are 7 times more likely to use quick-cash methods, like pawn loans, than non-LMI households.
Wage advances, like Pay on Demand, increase employee access to wages without the exploitative experience at the hands of the payday loan industry. The service requires no membership, no transaction costs, and no miscellaneous fees or costs like “tipping.”
Reduce Banking Overdrafts
According to FHN’s 2021 report, “43% of Financially Vulnerable households with checking accounts report having overdrafted in the past year, with 9.6 overdrafts on average.” Those overdraft charges can add up fast, and when they’re already financially struggling it’s the last thing they need.
Pay on Demand gives them daily access to a percentage of that day’s earnings, easing the pressure of avoiding overdrafts while waiting for payday. Plus, with AoD’s third-party partner, Clair, they can make payments directly or withdraw their daily funds from an in-network ATM.
Easily Access Emergency Funds
Most Americans have less than $1,000 in savings. When unexpected expenses arise, those emergencies can be devastating to an employee’s financial situation. Pay on Demand serves as a safety net during those moments, allowing the employee to access the necessary funds without resorting to more drastic measures to make up the difference.
When employees feel financial stress, it’s almost impossible for them to bring their best efforts and concentrate fully on their jobs. Reducing that stress also reduces distraction, which leads to better focus and greater productivity.
The Benefits for Employers
Pay on Demand provides tangible benefits for businesses, beyond helping employees reduce stress and increase their quality of life.
Reduction in Absenteeism
One of the important benefits of Pay on Demand is that it heightens the employee’s awareness of what a day of work really means to them financially. Having their pay lumped as a single dollar amount every week or two causes a disconnect of the real cost for calling off for a day. With Pay on Demand, they can see exactly what they make in a day. This awareness, coupled with the ability to access those funds immediately leads to a lower rate of employee absenteeism.
Improved Employer View
Offering Pay on Demand, like other impactful benefits, represents a tangible sign that the employer cares about their employees and their well-being. This knowledge not only boosts employee morale but also builds a more positive attitude toward the employer.
Better Employee Retention
Employees who feel cared for and supported tend to be more content in their work position, and happier employees generally stick around for longer. Studies have shown that companies can experience anywhere between 19-40% reduction in turnover with a program like Pay on Demand in place. In today’s competitive marketplace, meaningful benefits are critical to every business.
Gain a Recruitment Advantage
Pay on Demand acts as a real differentiator from competitors in the search for new talent. As we discussed in our previous blog, many job seekers see this as a must-have benefit.
Game-changing, Cost-free Benefit
Pay on Demand is a powerful benefit that can improve the well-being of both employees and employers. It’s a useful tool for employee retention and productivity, providing an advantage when recruiting new employees. Simultaneously, it makes a real difference in the lives of the people working at a company.
Employers using Attendance on Demand can access all of these advantages with no changes to their payroll process, no fees, and no liability burden for their company.
Interested in learning more about Pay on Demand? Watch the recording of our webinar, Exploring Wage Advance, where members of the Advanced Time team answer frequently-asked questions and provide further detail on the benefits of Pay on Demand for both companies and employees.