By setting up on-demand pay, you can give your employees access to wages they have already earned. Depending on your payroll provider, you may be able to integrate this type of system into your current payroll platform. Once pay-on-demand services are set up, you can enjoy lower absenteeism, reduced theft, higher worker satisfaction, and lower turnover rates. 

How Do Pay-On-Demand Services Work? 

With pay-on-demand options, workers can access their earned wages before their normal payday. Typically, on-demand pay is set up through your payroll provider or a similar platform, so the payroll provider handles all of the tax calculations.

When workers need their money early, they can simply go through the app or website to request their pay. Often, the payroll provider will charge employees a small fee for accessing this service. Once they have requested their pay, the employee is immediately given access to it. 

Many workers now expect to get their pay as they earn it. They grew up with Venmo, so they know the technology exists to get paid as their paycheck is earned. In fact, 78% of workers believe that accessing on-demand wages would make them more loyal to their employer.

The Advantages of Using On-Demand Pay 

By making it easier for employees to access earned wages, your company can enjoy a range of different benefits. In addition, this type of pay platform will make it easier for your business to attract and retain top talent.

1. Help Employees Focus on Work 

When you use on-demand pay, it makes it easier for employees to focus at work. They don’t have to worry about how they’ll cover their child’s medication or where their gas money is going to come from. Because employees are able to focus completely while they are at work, they are more productive and profitable for your business. 

2. Reduce Theft

In a recent Mission to Grow podcast episode, “On-Demand Pay: The New Must-Have Benefit for Job Seekers,” ZayZoon vice-president Shane Edrington pointed out how significantly pay-on-demand options could reduce employee theft at quick service restaurants (QSRs). “You’ll have a QSR type operation that will deploy it and they’ll report a 90% reduction.” 

While stealing from the till is never the right thing to do, the survey indicates that it isn’t the option employees prefer if they have a choice. If they are given access to the pay they’ve earned, 90% of workers will request their pay instead of stealing. For companies, this is a win-win situation. After instituting a no-cost or low-cost app, you can instantly reduce employee theft. On a human level, setting up an on-demand system allows you to support your employees when they need it the most. 

3. Decrease Absenteeism 

If an employee is worried about where their next meal is coming from, they may try moonlighting or working a second job in secret to earn extra cash. For example, they may use paid leave to spend the day driving for Uber so that they can get enough money to buy groceries or pay their power bill. When you make an employee’s wages instantly accessible, they don’t have to call in sick to earn money at a side hustle.

4. Boost Worker Satisfaction 

Younger employees are starting to expect pay-on-demand services from their workplaces. This type of payment option boosts worker satisfaction. One study showed that 60% of American workers thought their employer should provide them with immediate access to their earnings.

5. Attract Top Talent 

Another advantage of using on-demand pay apps is that it allows you to attract top talent. Thanks to a generational shift in births, there were more workers above the traditional working age than below it for the first time in American history in 2020. Because of this, attracting workers has become increasingly difficult, and this trend is only going to continue. 

One important way to remedy this problem is by offering the type of benefits and wages employees want. Employees want access to on-demand paychecks, so they are more likely to pick a job that has on-demand pay over a similar job that doesn’t.

6. Minimize Worker Turnover

During his Mission to Grow podcast, Shane Edrington mentioned a study where Visa reduced its turnover by 29% following the adoption of on-demand options. Workers feel valued when they are given the benefits they want. Additionally, they don’t have to work a second job or side hustle to access money in an emergency. As a result, they are more likely to stay with your company. 

7. Help Employees Avoid Late Fees 

If an employee doesn’t have on-demand wages, they will have to pay their bills late or resort to payday loan companies and predatory lenders. Over time, these late fees and interest costs will add up. By getting access to money when they need it, employees can save money and reduce the amount of stress in their lives. This allows them to focus better and be more productive at work. 

Learn More About On-Demand Pay for Small Businesses 

As a business owner, on-demand pay can help you attract top talent and improve your worker satisfaction. Thanks to its many benefits, pay-on-demand apps can also enhance your company’s productivity while reducing its turnover rate. 

To learn more about on-demand wages, reach out to our team of payroll experts today and learn more about how we can support your growth.