Same-day pay, also known as earned wage access or on-demand pay, is being paid for the day’s wages at the end of the day. Another way of looking at it is, shortening the payroll period to a day, rather than weekly and biweekly.
Same-day pay offers an alternative to pay-day lending, overdrafts, and credit cards. It often comes with little to no cost if offered as an employee benefit.
Many employees prefer same-day pay to handle day-to-day expenses that need to be covered immediately, along with the flexibility of selecting which days to work. According to an Ernst & Young Employee Financial Wellbeing Survey, 35% of workers fall short on an expense between pay periods. The annual cost to employers in lost productivity due to employee financial stress equates to about $300 billion.
Same-day pay benefits both employees and businesses
How does same day pay help both the employee and staffing firm?
Employees gain a lot from accessing their funds between pay periods to cover expenses earlier and track exactly how much they earn. Another benefit is covering surprise expenses such as broken appliances, car repairs, etc. This system allows an employee to maintain their lifestyle while still paying the bills.
- Boost employee morale
- Reduced financial stress
- Better financial awareness
Employers benefit too. Employers have an opportunity to support employee financial well-being, which in turn improves productivity and increases retention. When employee retention is a driving factor in a company’s success or failure, company owners and leaders need to be mindful of trends regarding hiring and maintaining employees. 20% of turnover can be attributed to the financial stress of employees. Inflation continues to affect this, especially during current times of extreme price jumps for everyday expenses like gas and groceries.
Employers tend to see a rise in enthusiasm and productivity as employees can view their funds daily and see the immediate results of working overtime, picking up extra shifts, or simply affording an unexpected expense.
- Decrease employee turnover
- Improve worker productivity
- Strengthen workforce loyalty
Driving factor behind same-day pay
One of the main driving factors for the surge in same-day pay is the gig economy’s growth. As people’s preference for independent contract work grows, so does their preference for same-day pay. Employees want to control when they have access to their money rather than being forced to wait for the next pay period. This approach primarily benefits contract employees who need or want the flexibility of the temporary positions.
Payroll funding for instant cash flow
Payroll funding provides instant cash flow by selling your open receivables to a factoring company in exchange for an immediate cash advance. Cash flow is critical for staffing agencies, and the gap between customer payment terms is a burden and stressful to agency owners. With TCI Business Capital, our custom payroll funding solutions provide the funds you need when you need them. Payroll funding with us is much more than just dependable cash flow. TCI Business Capital offers many value-added services for the benefit of staffing clients, such as:
- Customized Financing Solutions to Your Needs
- Funding that Grows as Your Agency Grows
- No Long-Term Contracts
- Dedicated Relationship Managers
- Professional A/R Management
- Credit Analysis Services
- Comprehensive Reporting
- Over 20 Years of Experience
To learn more about TCI Business Capital and our payroll fund program and back-office solutions click here. To learn more about COATS Staffing Software to automate your payroll and easily pay your employees, click here.