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Boost Up Your Business with EWA

Published 14 MAY 2022

What exactly is an Earned Wage Access?

An EWA (Earned Wage Access) is a payroll program allowing the employees to gain access to a part of their wages as soon as they earn them. These plans help the employees to pay their bills from time to time, thus reducing their financial stress. Because these schemes provide early access to your earned money, there is no interest charged.

Types of Earned Wage Access Schemes:

This program has different forms and can be delivered to consumers in different ways. Many authorized EWA schemes are offered by the employers themselves directly to the employees. There are different types of early wage access models:
• Direct-to-consumer: This scheme works more like a loan. The app sends money to the employee as an advance, and the employee has to pay it back out of their bank account on the day of payment.
• Self-hosted advances: It fulfils the wage advancement requests of an employee. Whenever the employees need some kind of financial support, the company comes forward. This may prove a bit risky for the administration.
• Self-hosted daily pay: Wages are paid daily. This scheme proves to be very hectic for the employers and may confuse tax payments and other factors.
• Employer Benefit: This model connects to the employer's pay sheet system and enables the employees to receive advance payments. The employer does not have to worry about anything as it does not have to provide extra money to the employees. The Earned wage access model has much less of a lift for both the employee and the employer.

How does the Early Wage Access model benefit the Employees?

Even before the pandemic, workers lived on a pay check-to-pay check basis. They experienced serious cash flow pressure, which was mostly driven by a disconnect between traditional pay cycles and daily Payroll. By offering employees immediate access to their payments, companies secure an easy method to attract workers towards themselves. Businesses find that EWA is very attractive to workers as it benefits financial wellness and makes a meaningful difference in one's life.
The benefits for the employees cover quicker payments, avoidance of credit card debts, default fines, and control over their own money. It also reduces financial stress. It gives the employees the liberty to use their salary as per their requirements. It provides flexibility and benefits mostly the lower-income employees by catering quick access to early payments during their financial needs.

EWA is also a response to the huge need for payday loans

One of the most important reasons for the growth of EWA is the high volume of payday loans. People take loans to pay their bills on time; this increases the burden on them as banks charge interest. According to a survey, around 12 million Americans use payment loans each year. $9 billion on average is paid annually in payday loan fees. The market size of global payday loans was valued at $32.48 billion in 2020 and is estimated to reach $48.68 billion by 2030. So, EWA is a saver in this case. It prevents people from stopping borrowing from the banks and paying heavy interest without any reason.

How does the Early Wage Access model benefit Employers?

When employees don't get the support they need from their workplace and are finally stressed, the business suffers. 3 in 5 Indian workers (November 2019) are stressed about money and are in financially unstable positions due to emergency Payroll. These Payroll affect the employee's productivity costing the company a lot more money.

To reduce this tension, the employees need to trust their firm to drive them to keep going. To get their payment almost immediately when you need it makes a huge difference. Someone going through a financial problem will understand the need.

Also, it attracts a lot of new employees as people will want to pick the advance salary scheme rather than the traditional payment methods. Another benefit is that employees can check how much money they have withdrawn. This helps them keep track of their Payroll too. The EWA system helps in increasing the employee trust in a company, resulting in reduced employee turnover. As soon as employee satisfaction increases, your company's value starts rushing to the top. From an employer's point of view, EWA is the perfect payroll model for the post-pandemic world.

Business Factors on which EWA depends

Although there are many reasons why EWA is one of the best schemes for your suitable business, it does depend on some factors. You must go through these before implementing the EWA system in your workplace.

Factors such as:
• Size of your workplace
• The firm in which you operate
• Contract types and salaries of your company
• Countries you operate in
• The difference in Requirements and payroll legislation of different countries.

Clearing Out Some Misconceptions about EWA:

• Workers will leave the company – Businesses think that workers will leave the company taking the money. But EWA increases the retention of employees. Rather than clearing out the workforce, it expands it.
• Advance payments are bad practices – Businesses always try to avoid financing in advance. But they fail to understand that this traditional pay system hampers employee productivity. EWA scheme simply allows employees to recover their payments in advance and allows both groups to succeed without gaining an unfair advantage.
• Access to money leads to unusual spending – Some businesses fear that employees will never save and spend frivolously. But, it's not the case. EWA gives them financial flexibility and saves them from debts, unpaid rents, and bills that may carry fines on late payments. Managing finance is easier when you have control over it.
• This system will scare new candidates – Companies think EWA will confuse new workers. But, today's young professionals prefer digital methods of payment more. They are interested in systems that are flexible and fast. So, they will prefer EWA more than any other payroll system.

Why does EWA serve as a company benefit?

EWA helps with retention and recruitment efforts. Employees seeing the advantages of this scheme quickly sign up for this, and by word of mouth, the positive reviews are spread. It helps differentiate businesses from competitors and serves as an angel program for those looking to hire tight labour pools. Once the workers start using it, it becomes very difficult to go back to the traditional payment method. It benefits both the employer and the employee, making it one of the best company benefits.

So, now you know why EWA is an attractive scheme for businesses and how it will help boost your business and give it new heights.

Conclusion: Companies, where work is more flexible are more suitable for EWA schemes. The EWA system helps free your employees from the burden of debts by giving them access to their earned money. It shows that your company values the employee's needs and is ready to contribute to your problems. So, by using the EWA scheme, your company will soon be powering ahead like never before. It makes sure that the employees are eager to work with you and your firm to ensure a better financial future.

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Editor Aronjit Roy


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