Is earned wage access the future of payroll?
With 57% of Australian adults unable to cover the cost of an unexpected emergency expense, early access to earned wages is more critical than ever.
But what exactly is earned wage access? And how could it revolutionise your business?
What is earned wage access?
Earned wage access is exactly what it sounds like. It is a way for employees to access the wages they have earned when they choose, even before a scheduled payday.
Earned wage access is still relatively new in Australia. Having earned wage access is still relatively new in Australia. People were forced to rely on high-interest payday loans or high-fee bank overdrafts to cover funds for emergencies.
Earned wage access gives Australian employees the power to meet life’s financial demands on their terms.
What are the benefits of earned wage access for employees?
If your employees are living paycheck to paycheck with no emergency funds, they could become vulnerable to traps, like taking on large amounts of credit card debt or taking out a high-interest payday loan.
But these “solutions” often come with a unique set of problems. An average payday loan user often holds up to three loans at a time, with a combined debt of $2,900.
Providing earned wage access could help mitigate that and give employees greater financial security. This in turn increases employee satisfaction, provides your employees with autonomy over their own money, and greater peace of mind.
What are the benefits of earned wage access for employers?
While a lot can be said about the benefits of earned wage access for employees, there are still plenty of benefits for employers.
In a post COVID-19 world, Australian employers are under more pressure than ever to offer greater employee benefits. More than a quarter of Australian businesses are having difficulty finding suitable staff, predominantly due to a lack of job applicants. In addition, businesses are finding themselves competing with the gig economy, where work is carried out and rewarded immediately. Earned wage access allows employees to enjoy the benefits of the gig economy within the safety and security of their role.
In addition, the speed and convenience of earned wage access could assist organisations with employee retention. Research shows companies who offer a daily pay solution decrease turnover by 19%. Companies offering a daily pay solution also reported decreased sick days and higher employee satisfaction.
Overall, the ability to offer earned wage access can give businesses a competitive edge against the gig economy. It can also increase employee retention and satisfaction.
What earned wage access platforms are available to employees?
Because employers determine pay periods, employees wanting early access to earned wages have turned to faster solutions, options like high-interest payday loans, high-fee bank overdrafts, or providers that charge interest on withdrawals.
These can often result in ongoing re-payment schedules, excessive interest, late fees, and the risk of over-extending and borrowing more than required.
For customers using the foundU platform, we have developed a new earned wage access feature called Wageflo.
Wageflo is unlike other early earned wage access access platforms. It is structured so that the relationship between you and your employees is not affected in any way. You continue to run your business as usual, with no changes to payroll, and you will not be liable should something occur that results in an overdrawn value.
Want to know more about Wageflo? Contact Us.