This National Payroll Week has arrived during a time of unprecedented financial hardship for so many of us. Spiralling costs for utilities, food and other essential goods has meant that more and more people are struggling to make their wages stretch to the next pay day.
According to research by Wagestream, 75% of the UK workforce have less than £200 in savings. That means a large majority of employees in Britain are living on a knife edge financially, with any unexpected outgoings having the potential to cause serious harm.
With over one third of UK workers still living paycheque to paycheque, having a degree of flexibility in how and when they receive their wages will be of the utmost importance for people who want to stay in control of their finances and not be blind sided by unexpected costs.
That’s where pay on demand comes in.
What is “Pay on demand”?
Pay on demand is a form of employee payment method which allows people to receive wages as they earn them. Rather than being tied to the traditional model of weekly, fortnightly or monthly pay, pay on demand allows employees the ability to have their wages “streamed” to them as and when they work shifts- avoiding long stretches of time between pay periods where money might be tight.
Another element of pay on demand is allowing workers the possibility to have their wages still tied into a rigid cycle but to also offer them the flexibility to draw down early, a portion of their salary that they have already worked in order to help cover emergency expenses or simply to cover a period of unusual spend (such as Christmas time, a bigger than expected bill or an MOT period for a vehicle.)
As a service, the flexibility offered by pay on demand often means it is associated with lower paid, shift pattern work such as within the manufacturing and distribution sector. Whilst there are undeniable benefits in being able to instantaneously incentivise overtime within these industries, there is an increasing indication that all sectors, regardless of their makeup, are looking to explore how introducing an element of flexibility into their pay cycle can help transform their organisations.
Why is Pay on Demand important?
Pay on Demand is a functionality designed first and foremost to provide employees with a degree of flexibility and security when it comes to their finances. We’ve all known what it’s like to have that seemingly endless wait between pay periods, slowly crawling towards pay day whilst carefully guarding outgoing spend. With the stresses of the past couple of years in mind, we can understand that this level of financial strain will only have been exacerbated for many, with many employees having experienced reduced income and hours, particularly over the course of the pandemic.
As businesses look towards the future, there is now a greater need for organisations to be aware of the impact events may continue to have on the finances of their people. Research by Neyber found that on average, money worries lose the UK economy on average a staggering 17.5 million hours of lost work. Furthermore, with 59% of workers also feeling that financial worries impact their performance, it’s clear that business cannot afford to take their eye off the ball when it comes to the financial wellbeing of their employees.
The finances of many businesses may also be on a knife edge which is an understandable consequence of a prolonged period of global disruption. With this in mind, the focus for many will likely be solely on driving forward productivity and profitability for the future, with very little capacity available for traditional financial rewards and incentives. Whilst many organisations will be tightening their belts in this fashion, the power of pay on demand is that it empowers you with the capability to acknowledge and reward your people for their work, without compromising your finances. By incentivising overtime with instantaneous pay, you allow your employees a degree of flexibility and also ensure that unsociable or difficult to fill hours are never left empty.
How can Pay on Demand help your business?
As the cost of living crisis hits home for many, what seems clear is that there appears to be an appetite to no longer be beholden to the older, more rigid structure of pay.
Similarly, businesses will find that pay on demand not only offers them the flexibility to incentivise overtime but also provides them with the ideal avenue to reward their people financially during a period where finances and reward schemes may be leaner than ever.
Regardless of the needs of your business, it’s evident that the working world is crying out for more flexibility in how they run payroll. Here are just some of the ways Pay on Demand can help transform your pay cycle:
Reduced waiting times- We all understand the pain of waiting for that next paycheque, especially after big occasions such as holidays or the festive period. Sudden demands such as MOTs and emergency repairs can also crop up unexpectedly, throwing a spanner into the works and meaning that people need access to extra cash fast. Pay on Demand offers the flexibility for employees to receive money as and when they need it, keeping their pay cycle agile enough to meet unexpected costs without the agonising wait.
Financial wellbeing- The traditional, rigid pay structure can mean that often, due to emergency expenses, employees simply cannot wait until the next pay cycle to cover sudden costs. This has lead to a rise in recent years of money lending organisations and payday loans, designed to give an instant boost but one that can actually end up saddling the person with increased outlay in the long term, due to hefty interest fees.
The desperate wait for the next pay cycle can lead to your people taking desperate measures in order to keep their heads above water- steps which will in many cases, only exacerbate any stress and uncertainty in the long run: With one in four workers admitting that they lose sleep over money worries, it is clear that wider concerns around finances can heavily impact the wellbeing and performance of your people.
By offering flexibility within your organisation’s pay cycle, you can ensure that your people have access to their money as and when they need it, steering them away from creditors and other lenders who can potentially effect their finances negatively in the long run.
Reduce absences- Pay may not seem to have the most obvious link with employee absences and yet, there is increased indication that stress related sick leave may be more closely entwined with financial worries than previously thought.
Being beholden to a more rigid pay cycle may only serve to exacerbate financial stress, leaving your employees struggling between paycheques and plagued with worries about making ends meet. By introducing a degree of flexibility into your pay process, you are able to encourage your people to drive open and honest discussions around financial worries and allow them access to their wages as and when they need them, mitigating some of the impact of financial stress.
You should never be in the dark about the wider needs of your people and pay on demand functionality allows your people the flexibility to stay on top of their outgoings and to not let themselves become swamped by outgoings. By looking after your people in this way, you can greatly minimise the stressors that can lead to them being absent from the workplace.
How can Advanced Payroll help you make use of Pay on Demand?
We created Advanced Payroll specifically to help tackle challenges facing payroll professionals day in and day out. We’ve taken on board the experiences of people working in the field in order to craft a solution which can free payroll teams from the burden of admin heavy tasks and allow them to leverage their skills in more meaningful ways, including supporting the financial wellbeing of their people. With Advanced Payroll, you have the option of using Pay-on-demand to help support your employees through tough times, at no extra running cost to your business. Get in touch with us to find out how we can help you make use of pay on demand here.
We also appreciate that the transformation of your payroll processes is never a thing to be taken lightly, which is why we’re here to support you every step of the way and make sure you can hit the ground running with your new solution.
With Advanced Payroll, you get:
A choice- Advanced Payroll can be deployed in the cloud or on-premise, whichever suits your business more.
Real time calculations – instantaneous gross to net calculations for up to 10,000 employees in just 20 seconds..
Super speed processing – Calculate BACs in under 20 minutes
Pay on-demand – employees can draw down earned pay as they need it
Reporting – building your own reports has never been easier
Employee on-line access – data, documents and payslips at your people’s fingertips. Roughly 439,000 payslips are currently processed by Advanced Payroll each month.
Advanced Payroll offers you the scalability and flexibility you need to completely transform the way in which you run payroll, capable of working effortlessly across multiple sites and pay grades. Whether operating as a standalone system or integrated with our Time and Attendance, HR and Access Control solutions to form a comprehensive Workforce Management suite, Advanced Payroll helps you process payrolls efficiently.
Our solution gives you the comprehensive reporting, GDPR auto-processing and audit trail capability you need to have peace of mind that your payroll is being run accurately and in a compliant fashion month in and month out.
This National Payroll Week, why not consider payroll software and the power of pay on demand to help free your people from the older, more rigid pay structures of yesteryear. Give your people the flexibility they need to ensure they are never caught off guard by unexpected outgoings and create a pattern of pay that works for your people. Explore Advanced Payroll today.