It’s estimated that 12 million Americans take out payday loans every year. The cost of those loans is more than a whopping 9 billion dollars. It means that employees are willing – or forced- to pay to get their wages early.
It also means employers can help with early payroll to improve employee satisfaction.
Early payroll, sometimes called Earned Wage Access or “EWA”, is when you give employees their earned wages sooner than the designated payday. When payday comes early, good things happen for you and your team.
Why do employees want early payroll?
The HR landscape is changing because the Millennial and Gen-Z workforces have higher expectations for their employers. Generally, they want a richer employee benefits package. However, you find that early payroll is often one of the missing pieces of the puzzle that results in most employees living a paycheck to paycheck lifestyle.
Think about it – employees have to wait for a rigid payday and hope an unexpected expense doesn’t materialize before that payday. If it does, employees have to jump through hoops to find the money they need. They might even call in sick so they can work a side gig that pays on the spot. Meanwhile, their earned wages are locked up in a traditional system and can only be released on a set day.
When employees need money before the next paycheck, they may ask employers for an advance, but the protocols for this often take time.
Most employees take out payday loans, but as stated, that means they are paying to get their earned wages early. To make things worse, payday loans come with steep loan fees and payday loan lenders can be a predatory and exploitative bunch.
This increases the financial burden on your employees. It’s pretty clear why employees want early payroll and other modern payroll alternatives like payout cards. It’s about convenience, flexibility, and financial wellness and these things can make a world of difference to employees and employers.
The benefits of early payroll for employees
The happiness level of employees can make or break an organization. Therefore, the benefits of early payroll for employees are worth noting:
- Financial cushion for emergencies – Early payment saves employees from the trap of high-interest loans and the hassle of begging and borrowing from friends. We all know that emergencies don’t follow a payday schedule but tend to happen at the most inconvenient time. If employees get their earned wages sooner, they can easily cover unexpected expenses with minimal stress.
- Helps build a flexible work culture – Early payroll requires flexible employers who are willing to think outside the box to keep workers happy and financially comfortable. For instance, it’s a big disappointment when payday falls on a weekend and employees receive their money the next week. In contrast, there’s always excitement in the air when payday comes early. It’s a big step in the right direction for better employee retention and satisfaction.
- Allows employees to make on-time payments – Sometimes, payday doesn’t always align with due dates for bills. Early payroll helps workers avoid skipping bill payments or making late payments. It helps workers match their incoming funds more closely to their outgoing expenses. This reduces fees and will help improve their credit scores over time. It also boosts financial wellness while reducing financial stress.
What advantages does early payroll give to employers?
Early payroll offers value to HR and business owners as well.
- Increased retention – Early pay contributes to employees’ financial stability. When employees feel stable, they rarely want to upset this delicate balance so they will stay with the company longer. Early pay is also linked to employee satisfaction which comes from better financial security.
- Improved productivity – When you go the extra mile by offering early payroll, your workers are more willing to give you their best work. It also helps that they’re less stressed about finances and can focus more on the tasks at hand. The improved productivity will reflect handsomely on your bottom line.
- Better attendance – With access to early pay, you’ll have better attendance. Employees won’t feel the need to call in sick in order to work one-off gigs so they can pay rent or bills. It could even potentially help employees not feel the need to work second or third jobs.
- Helps with acquiring elite talent – Early payroll is a relatively unique and modern benefit that can attract more high-quality job applicants. For most employees, it’s an important factor they can use to determine their choice of employer. When your workforce comprises top talent, this spells good news for your company’s growth and profits.
- It’s an inexpensive employee benefit – Small and medium-sized businesses aren’t always able to provide supersized benefits to their employees. Fortunately, they can still sharpen their competitive edge by including early payment in their benefits package. A survey by Harvard Business discovered that an optimal mix of inexpensive and lucrative benefits helps employers attract the right talent even if they can’t offer hefty salaries and costly job perks.
Is early payroll hard to set up? (Not with Juice Banking!)
When setting up early payroll, there’s the easy way and the hard way. The hard way typically involves spending late HR hours trying to submit payroll early through direct deposit and writing paper checks for employees without bank accounts. The easy way is with Juice Banking.
Juice Banking provides a modern and easy payroll solution that allows you to issue payments as early as possible without it being an administrative nightmare. The great news is we help our clients familiarize themselves with the platform in 15 minutes or less, so the setup doesn’t involve any heavy lifting. Get started with Juice Banking and forget the outdated way to do payroll. If your goal is to improve employee retention and satisfaction, learn more about the top tools you can use to “Juice” your business.