Personal cash flow is a significant issue for the almost six million Australians that are living paycheck to paycheck. Often, the timing of their next payday leads them short on cash when hit with a sudden bill or emergency expense throughout the month. For most of these workers, the solution is to use a credit card, use funds from important savings accounts or apply for dangerous payday loans.
Furthermore, the resulting financial stress impacts these employees at work. In fact, according to the ANZ Financial Wellbeing Report, financially stressed workers spend almost 10% of their paid working hours thinking about financial issues. They also found that financial stress led to increased employee turnover and sick days being taken, costing employers up to $31 billion every year.
Australian businesses are increasingly turning to Earned Wage Access as a method to increase the financial wellbeing of their employees. Earned Wage Access allows workers to access their earned pay on their terms (and at a low cost), reducing their reliance on the timing of their paychecks. In addition to helping employees manage their finances, Earned Wage Access also promotes improved employee retention, engagement and productivity.
What is Earned Wage Access?
Earned Wage Access allows employees to access their earned pay at any point in the pay cycle, without having to wait until their next payday. When an unexpected bill or expense arrives, instead of turning to credit or a payday loan, employees can alternatively access a portion of their earned wages to cover any shortfall.
Paytime gives your employees on-demand access to their earned wages through a convenient mobile app. It’s easily worked into your existing payroll system, avoiding any disruption to your usual processes. When an employee wants to access some of their earned income, they will be charged a small, fixed platform fee (less than the cost of a cup of coffee) and Paytime will deduct the amount from their next paycheck. It’s not a loan, there’s no interest to be paid, and it doesn’t cost your business any additional money!*
The Main Benefits of Earned Wage Access
There are many reasons why Earned Wage Access offers a sustainable benefit to both your employees and your business, including:
- Increase financial wellbeing. Australian households pay an average of $468 in bank fees every year. Much of this is due to credit card charges, overdraft fees and late payment penalties from those living paycheck to paycheck. Banks and other financial institutions make a whole lot of money out of people who already struggle with personal cash flow. Paytime is focussed on stopping this from continuing!
- Improve engagement and retention. According to research from Gallup, only 24 percent of the workforce said they felt engaged with their work. Minimising financial stress is essential to maximise workplace productivity. A financially stressed employee’s attention is likely to be split, making it harder for them to apply themselves to their job entirely. A 2015 study from the University of Warwick found that “happiness made people around 12% more productive,” highlighting the importance of positive employee mental wellbeing.
- Offer an attractive employee benefit. Most employees will not mind paying a small fee to access their earned wages when they need it. However, many employers subsidise the fee and choose to offer the service as a valuable employee benefit. Job seekers are almost two times as likely to accept a 13% lower salary when Earned Wage Access is an option.
While the advantages for employees are clear, employers also benefit from increased employee retention, higher engagement and improved competitiveness in the labour market – Earned Wage Access is truly a win-win!
Why Changing Your Pay Cycle Frequency is Unlikely to be Effective
While banking and electronic transfers have enabled some improvements to the movement of our money, most workers are paid just once a month, fortnightly if they’re lucky. Why is this the case? Can’t employers just run a weekly pay cycle instead?
- Insufficient: Younger, Gen Z employees crave instant satisfaction. Even a weekly pay cycle will not adequately address their demands for instant, real-time access to their earned wages.
- Inefficient: Every pay run consumes valuable processing time from payroll staff. If you currently run a monthly cycle, changing this to weekly will effectively quadruple your staff’s workload on this task.
- Costly: In addition to the time, money is at stake. Running a more frequent pay cycle increases the costs to a business – especially if they use an external payroll service.
Increasing the frequency of the payroll process isn’t a great solution. It’s not sustainable to increase costs to the business, and the benefits aren’t as clear as the alternative of Earned Wage Access. Fortunately making the switch is simple. Paytime simply integrates with your payroll process and helps your employee’s flexibility access their earned wages without costing your business!
If your business wants to enable your employees to improve their financial wellbeing, workplace engagement and productivity without increasing the frequency of your pay cycle, contact Paytime today!
