What Is On-Demand Pay?

August 2022

With the cost-of-living crisis currently affecting the UK, many employees have ‘too much month at the end of their money,’ and are really struggling to meet their financial commitments. The costs for travelling to work to buying lunch to paying for school lunches are all on the rise, which is having a negative effect on household budgets, financial well-being, stress and mental health.

Inflation is calculated using the Consumer Prices Index (known as the ‘CPI’). The Consumer Prices Index measures the change in prices over a 12-month period of a representative ‘basket’ of items and services. The Consumer Prices Index rose by 9.1% in the 12 months to May 2022, up from 9.0% in April. This is the highest rate of inflation in over 40 years.

 

How does financial stress impact employers?

In a study carried out by CIPHR in 2021, it was found that financial worries are the joint main cause of stress in the UK. In a study of 1590 respondents, 43% ofwomen and 35% of men listed financial worries as their main cause of stress. Whilst stress itself is not an illness, there are direct connections between stress and mental health. Mental health is the biggest cause of absenteeism from work in the UK.

In a report in 2016, it was found that financial stress costs the UK economy nearly £121 billion each year. It was also reported that 17.5 million hours were lost due to absence from work because of financial stress. With the current cost-of-living crisis, these figures are expected to have risen exponentially.  

Accordingto the Mental Health Foundation, employees affected by work-related stress lose an average of 24 working days per year.

Financial stress costs employers money in lost or reduced productivity, absenteeism and/or ‘presenteeism.’ Presenteeism is where employees are in work but they’re not carrying out their duties because they’re focusing on their problems or dealing with their problems during work time.

 

What is On-demand pay?

On-demand pay is where an employee is able to access up to 50% of their accrued earnings ahead of pay day. This can help ease the burden of a financial shortfall and help employees to meet their short-term financial obligations.

With PayCaptain, monthly paid employees can ease their immediate financial pressures by using the automatic Weekly Advances feature. Employees can access up to £50 of their accrued earnings each week, paid directly into their bank account every Monday morning.

These advances can be helpful for employees to manage part of their budget on a weekly basis, whilst keeping keep funds protected for their bills and direct debits at the end of the month.

As well as the Weekly Advances feature, PayCaptain also gives employees the option to access up to £200 of emergency cash, as long as the salary has been accrued. This allows employees to deal with emergencies when they have no savings to cover them.

PayCaptain has helpful reporting for employers to see how often employees are using the emergency cash function, as this indicates that a staff member is struggling financially. At this point, the employer may decide to talk to the employee to offer support and advice.  

 

How does PayCaptain help?

Not only does PayCaptain have On-demand pay, but the PayCaptain mobile app has a host of innovative functionality to help employees manage their money better. The app also provides money management support and advice when they are struggling. The app contains functionality that’s specifically designed to help vulnerable and low-income employees improve their financial well-being.

Features include:

-        Money planning tool – where employees can create a personal budget as well as access helpful financial guidance. PayCaptain is passionate about giving employees the opportunity to understand their income and spending, which leads to an increase in financial well-being.

-       Financial well-being scoring – this is a survey for employees that creates a financial score and provides guidance to help financial well-being.

-       Personalised financial guidance – trusted financial guidance can be accessed directly through the PayCaptain app. The PayCaptain Team is also available to support employees directly with best practice information and recommendations for money management.

-       Payment splitting – this functionality allows employees to make payments direct from their net pay to landlords, loans, credit cards, mortgages etc – eliminating the risk of missing an important payment.

-       Savings – the PayCaptain app makes it easy to save money every month, so employees can build reserve funds to access in times of need. Employees can pre-plan the amount to save and its automatically transferred from net pay. When an employee doesn’t have an existing savings account, one can be opened directly through the PayCaptain app.

-       Debt management support in partnership with Money Helper. Money Helper offers free, confidential advice for people struggling with debt. With specially trained debt advisors, Money Helper offers solutions to help people get out of debt faster. Their service offers advice on money management; investigation into benefits or financial support that the individual may beentitled to; looking at the different options for dealing with debt and speakingto creditors about payment holidays or reduced payments. Accessing support through Money Helping is confidential and is available through the PayCaptain mobile app.

In summary, PayCaptain is a solution that helps improve the financial well-being of employees through innovative functionality like on-demand pay, payment-splitting, savings and pensions. With on-demand pay, employees can assess a portion of their accrued wages to deal with financial emergencies and everyday expenses, whilst protecting their remaining salary to meet their financial commitments.

 

PayCaptain Payroll Solutions Limited, www.paycaptain.com is an HR/FinTech company that delivers a fully automated cloud payroll service. The solution contains many unique and innovative features for employees, helping them to take control of their pay and increase their financial well-being. PayCaptain is a payroll solution that helps employers pay their workforce, regardless of income and personal circumstances. The solution also incorporates functionality that's specifically designed to positively impact financial resilience for people struggling with money, or vulnerable and low-income employees.

PayCaptain is the world’s first payroll company to be B-Corporation certified. To read more about B-Corporations, visit www.bcorporation.net

PayCaptain has been recognised and rewarded with two B Corp ‘Best for the World’ awards for being within the top 5% of highest scorers within both the Workers and Governance impact areas in the B Corporation B Impact Assessment.

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