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How giving employees early access to earned wages is suitable for your business?

Published 14 MAY 2022

What is Earned Wage Access (EWA)


Earned Wage Access is a bank-like setting where the employees can see and withdraw the money they have made throughout the month. It is a fintech product and enables them to access a portion of their followed but unpaid wage any time before the day of payment, with the remaining amount being paid at the end of the pay period. It helps them with more liquidity to manage unexpected Payroll and improve their financial conditions. It helps prevent most households from falling into the vicious cycle of debt. This is also known as on-demand salary.

Why is EWA beneficial?

Over two-thirds of the population reported mental distress, lower self-confidence, and physical health issues due to financial difficulties. When this stress is carried into the workplace, it exhibits distraction, reduced performance, and ultimately has a negative impact on the business. And according to researchers, about 25% of American employees expect assistance in securing their financial protection from their employer. So, EWA helps the entire system get rid of the traditional pay cycle and gives them access to their salary at any time of the month.

Benefits of Early Access to Earned Wages:

Early Access to Earned Wages, if once implemented successfully and it starts running to its total capacity, it does not stop amazing its users. It delivers benefits for both the employee and the employer in a firm. It offers a transformative benefit to a wide range of businesses and improves the liquidity in the system. Here are a few benefits listed below :

For Employees:
• Financial Safety: EWA does not involve borrowing. In a world where saving is more hectic than before, the ability to pay bills on time is extremely necessary. So, when employees get emergency funds when suddenly an unexpected account or expense arrives without suffering from more debts, they feel safer.

• Flexible Pay Plan: Employees have control over when they want their payment. This allows them to fix their play dates as per their financial requirements. It prevents the fall into financial hardship. Employers can see the advantages for their employees with this solution.

• Continuous Calculations: When employees access their payment before their payday, it gets deducted from the total earnings they would have received on the payday. This gives them the liberty to see their accessible funds with each passing day. Thus, they can keep a check on their payments and act accordingly.

• Mobile app Convenience: The employees withdraw the amount needed via the app. The system pays the money directly to the employee's account without any intervention from the payroll team. Employees can withdraw a part or whole of their unpaid income at a minimal transaction cost before the payday without disrupting the organisation's payroll process.

For Employers:
• Improves reputation: Employers play a critical role in encouraging responsible financial behaviour among employees. EWA does the work, which helps the business gain a positive reputation. Both the existing and upcoming employees remain satisfied.

• Provides flexibility to global businesses: Global businesses have to deal with employees from different countries worldwide. It must be very difficult for the payroll teams if they use traditional methods of pay-checks. The teams have to deal with employees from different countries, thus different payroll requirements. A unified EWA solution removes all the significant managerial burdens from international businesses.

• Easy Enlistment: EWA is a fairly evolved global concept. Employees' satisfaction is directly or indirectly linked with long-term corporate success and greater workplace productivity. EWA is witnessing steady traction with per month growth with more new clients. So, when a candidate sees a firm adopting this technology, it attracts them to the firm. As EWA is a major selling point in today's competitive market, it can attract many talented candidates from across the globe.

• Reduces Absence: According to PwC, employees spend more than 3 hours focusing on financial issues instead of their actual work. Around 12 % of workers miss work due to these problems. Hence, they are less stressed when they have control over their pay. They seem more driven towards their work and can concentrate on their jobs without distraction. Their productivity increases too. Also, when an employee sees his working days as the amount he is getting paid, he will never want to skip days at work.

There is an essential data collected which relates to the social impact of Early access to Earned Wages:
• 88% of users claimed that EWA proved to be more beneficial than any other payment option.
• Users started relying less on high-cost credit loans. 88% fewer users used payday loans, and around 39% less used credit cards for their financial issues.
• Many Users started relying less on emergency incomes as EWA tackled all their complex financial issues in no time.
• The employees' quality of life was seen to have improved by a whopping percentage of 72%.

Why do Businesses not prefer changing the Payment Schedule?

Changing the pay schedule frequently of your firm will not take you far in the long run, and it does not provide the rest of the benefits that play an important role in a comprehensive benefit for the employee.
Here are some benefits of EWA over changing payment schedules as follows :
• EWA gives its users all the earning updates they want, which simply change the payment schedule can never give.
• Even if we change payment schedules frequently, it is impossible to provide 24 hours instant access to your salary.
• More frequent pay schedule changes could increase payroll service costs which will hurt the business firm.

Conclusion: Offering employee benefits improves the financial conditions of your workforce and increases their work efficiency. It also drives them to go the extra mile. EWA is a game-changer in the field of payroll infrastructures. It is a very progressive and flexible way to support employees' changing habits, which leads to the business's success. When employees work effectively and are engaged more in their work, it makes sales and builds the brand. positive customer interactions

                        

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Editor Aronjit Roy


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