Today, financial technology has improved by leaps and bounds, with many companies offering new ways for companies to keep track of how and when they’re getting paid.
It’s all part and parcel of increasing business efficiency, keeping employees happy and productive, and boosting the bottom line. But what if there was an even better and more effective way for employees to access their money?
Enter the “early access to earned wages” concept. It’s designed to take a swing at the traditional payroll schedule, which has certain limitations for freelancers, employees, and employers.
What is early access to earned wages?
Early access to earned wages is a new approach to payment. It’s sometimes called on-demand pay, or some similar variation. In any case, earned wage access allows your employees to tap into their earnings on the go instead of waiting until the end of the pay cycle.
That means employees can access their wages at any point along the pay cycle. How much they access depends on the number of regular working hours worked.
There’s a reason why early access to earned wages has become a hot topic among small and medium-sized businesses.
But how exactly is earned wage access beneficial and to whom is it beneficial?
Why is it great for freelancers?
Early access to earned wages has been a welcome change to the gig economy in several ways:
Freelancers and 1099s are well-known for their love of flexibility. To most freelancers, the idea of digitized payment methods is highly desirable. It saves time because gone are the days of collecting paychecks in person.
There’s also no need to rearrange life events and schedules around an immovable traditional payday.
Greater financial stability
While most Americans live paycheck to paycheck, freelancers sometimes have it harder than full-time or part-time employees. Fortunately, on-demand pay can be a comfy financial cushion that protects against irregular income.
Instead of waiting for the client’s scheduled payday, freelancers can receive early payment for services delivered, which helps them manage cash flow better.
Satisfaction with clients
Having more payment options on the table is a good thing for freelancers. Knowing that you can choose to access the money that’s owed to you whenever you want means that freelancers experience greater satisfaction when working with clients.
This is essential for overall well-being, especially with long-term contracts where the freelancer interacts and works for the client more frequently.
Why is it great for employees?
Undoubtedly, earned wage access is a breath of fresh air for employees who have long been subjected to the traditional payday.
Less financial stress
Unexpected expenses have a way of popping up without consideration for the traditional payday schedule. With early access to earned wages, employees have money available for emergency use.
They can also take care of unexpected expenses as they arise, which is much less stressful than other alternatives.
Leads to fewer debts
When things get tough and payday is too far off, employees often can’t resist the temptation of payday loans. The problem with payday loans is they often carry high-interest rates. If employees rely too much on payday loans, it’s easy to get sucked into the vicious debt cycle, especially when dealing with predatory lenders.
The excellent news is that earned wage access is not a loan or cash advance, so there are no interest fees and charges involved.
Better work culture
Earned wage access programs are now a major component of the benefits package offered to employees. In turn, the right benefits package fosters positive behaviors and work-friendly attitudes by creating a favorable work experience.
Are you at risk for the Great Resignation? Take the assessment to learn more.
Why is it great for employers?
If you haven’t already rolled out an earned wages access program, here are the top reasons why you should:
Improved employee retention
One of the biggest headaches employers face is finding employees that stick around. Employers looking for recruitment strategies with better outcomes should take advantage of earned wages access programs.
Employers can pitch these programs as an employee benefit which helps attract loyal talent. Potential candidates are always on the lookout for the best and unique employee incentives, such as same-day pay.
Increased employee performance
Are you looking to increase employee engagement? The best way to achieve this is by meeting the needs of your workforce. The truth is, most employees have a constant need to access funds to cover life emergencies.
By reducing the financial stress they face, you’re helping build a positive work culture and improving work experience. Employees thrive in such environments and become more productive.
Significant impact on the bottom line
Adopting an earned wage access program helps reduce ongoing recruitment expenses, boosts employee satisfaction, and improves productivity. This adds up to a better bottom line, which is every business’s ultimate goal.
What’s more, making the switch to earned wages access from traditional payday is easy, convenient, and will complement the payroll schedule that works best for your business.
Ways that employees can access early wages
Here are two ways in which earned wage access technology can be implemented:
- Payout cards – Payout cards or pay cards are reloadable cards where you can load your employees’ wages quickly and easily from your computer or mobile device. The card works just like a debit card, so your employees can perform transactions freely – even without a bank account.
- Instant Pay – Directly depositing is another digital payment method that involves transferring wages to employees’ bank accounts. The money is available instantly. However, this payment method is not viable for employees without a bank account.
Get on board with Juice for Business
According to the American Payroll Association, digital early payment is a win-win for employers and employees. So, if you’re ready to get started with your earned wage access program, we highly recommend that you try Juice for Business.
Our customizable Juice Payout Cards are the perfect and most flexible solution to getting your employees paid whenever and wherever. The benefits for small and medium-sized businesses include no bank charges, convenience, and time savings – as well as increased Employee Retention & Satisfaction.
Order custom cards for employees and contractors today and become the employer of choice in just a few minutes.