Nearly every employee will agree that getting paid is one of the main (if not the only) reasons they get a job in the first place.
However, as an employer, it can be difficult to know how and when to pay your employees in a way that will be attractive to them, but also sustainable for the business.
Before we get into what on-demand pay is and whether you should offer it, we need to first understand why it even exists.
Expenses can be Unpredictable
Sometimes the frequency of, or amount in, a paycheck isn’t enough to meet an employee’s needs and pay all of their bills simultaneously. Being unable to pay bills can result in extra stress because of costs like late fees and interest, especially with the rise of payday loans. It’s a seemingly endless cycle that’s hard to break and weighs heavily on many peoples' minds. That’s why one of the first things applicants consider when looking for a job is the pay and related financial benefits.
Offering routine, steady, and well-managed pay and financial benefits to your employees also helps you as the employer. It will draw in more potential hires by showing them that you’ll help them become (and stay) financially stable. This can be especially enticing to young adults who are new to paying bills for themselves and may need some help budgeting. It also shows your existing employees that you value them and understand the hardships they may be going through, especially these days.
One of the best ways to help your employees remain financially stable is by giving them a routine and reliable paycheck. Even if you already do that, you can offer extra flexibility with the option to access their payments at times other than your designated payday. While this sounds like it could easily become complicated enough to get out of hand, having the right software can make it incredibly simple.
So, What Is On-Demand Pay?
The market for on-demand pay has been rising steadily in recent years. It’s a method of paying your employees in a more hands-off way that is also more convenient and accessible to your workers. The basic premise isn’t very complicated. Using software like PayCaptain, a specialised website, or some other form of technology, companies can give their employees access to payments when they need them, even if it’s outside of the regular pay period. This often includes an advance on their paycheck, which they can use to cover bills and avoid late fees.
Life is unpredictable and so are living expenses. If an unexpected cost arises and it’s severe, there’s a fair chance the person affected by it won’t be able to postpone taking care of it until their next paycheck arrives.
How Does On-Demand Pay Work?
As mentioned above, on-demand pay gives your employees access to a limited amount of money between paychecks, which they can use for urgent or unpredictable expenses. However, there are a number of different solutions, all of which handle on-demand pay differently in terms of when and how employees can withdraw funds.
Since both parties, the employer and the employee, will almost certainly have differing opinions on the topic, it’s crucial to ensure both needs are balanced as fairly as possible. Ask for feedback from your employees and show them that you want to listen to their concerns. Weigh your budget and cash flow options carefully to ensure that this move won’t hamstring your ability to operate on a daily basis.
Check out this recent interview with our Founder Simon Bocca that dives more into on-demand pay, and how we’ve chosen to handle things at PayCaptain
Should I Implement On-Demand Pay for My Employees?
While on-demand pay sounds great for employees and most people would greatly appreciate it, there’s more to it than that. You see, offering on-demand pay can benefit your company, as well. It may be difficult for a company that has not yet implemented on-demand payment to see it, but it offers many benefits to both sides of the table.
A New Means of Enticing and Retaining Employee
Though we like to think our jobs have a grand purpose, money is most often the primary motivator for those seeking employment. And even if it’s not the reason they want the job, pay and benefits still factor heavily into whether or not someone accepts a position. Unfortunately, while on-demand pay is becoming more common, many companies still don’t offer it to their employees.
By offering on-demand pay and pitching it as a benefit during a job posting, you’ll be able to more easily entice qualified workers into your company over another potential employer.
A New Reason for Current Employees to Stay
It’s not only new employees who want flexible, easy-to-access payments. Consulting with your current employees to iron out the details of a new payment system that keeps them in mind is a great idea. That way, you can make them feel heard and valued, in addition to offering them better, more convenient payment options.
Boost Employee Morale by Reducing Stress
Emergencies can happen at any time, and more often than not, they’re pretty costly. The crisis itself is stressful enough, so you can help reduce or eliminate stress from the financial aspect by providing access to payments as needed. Financial worry is a leading cause of distress and is closely linked with mental illness. Less stress means higher morale, which in turn increases productivity. That means more revenue for your business.
The Downsides To On-Demand Pay
Whilst there are certainly a lot of positives behind on-demand pay, the downside can’t be overlooked. Giving employees complete unlimited access to funds whenever they want it, can actually do more harm than good in some instances. We’re all guilty of spare of the moment purchases or having “one too many” on a night out. Sometimes these small decisions can cause big issues down the line, like missing important bills or payments such as rent.
That’s why with PayCaptain, we decided to do on-demand pay a little differently. We allow employees to access emergency cash for when they need it, but not abuse the system. Our clients say this balance helps them to benefit from the positive aspects of on-demand pay, but avoid some of the negatives that can end up affecting an employees mental and financial wellbeing.
How Can I Implement On-Demand Pay?
On-demand pay is relatively simple in practIce. Still, the process of implementing it and switching over can be a bit messy if you don’t have the right tools to get it done. That’s why finding the right payroll platform, like PayCaptain, is so important. PayCaptain offers quick and easy support and tools for implementing on-demand pay and the software you need to make the process quick and painless.
Our purpose is not only to make payroll fast and efficient for you, but to offer unique benefits to your employees. Payroll needn’t pit worker against employer as if what’s good for one is bad for the other. We believe that a good payroll software can offer benefits to both sides of the equation, and created a revolutionary, easy-to-use system to prove it.
PayCaptain Can Help
PayCaptain makes payroll management quicker and easier than ever before. We offer simple, practical ways for your employees to gain more control over their payments. As the first cloud-based payroll system in the UK to combine financial wellbeing with powerful payroll, we stay on the cutting edge of innovation to help your organisation thrive. Once you partner with us, your employees will have more options than ever before while deciding how, when, and where they get paid.
Our expert team will also consult with your on the best options/solutions for your business.
To learn more about this benefit and the many others offered by PayCaptain, be sure to arrange a demo today and see how we can help streamline your payroll process.