No other department understands the old adage of ‘time is money’ better than the payroll team. Literally, their entire focus revolves around time and money.
So it makes perfect sense that the payroll team would make it a priority to avoid unnecessary time-consuming tasks. Interestingly, that approach is especially helpful when considering new technology. Take earned wage access (EWA) as an example.
The rapid rise in popularity of EWA, where employees and contractors are able to access their earned income before payday, has also seen a rapid rise in the number of providers, with each using different approaches to deliver the service. The wide variety of approaches makes it difficult for payroll leaders to wade through the marketing hype to really understand the impact of their time when it comes to implementing and maintaining this new technology.
By nature of their position, payroll professionals spend dedicated time defining processes that ensure people are paid the right amount on the right day. Now, we understand that change can be daunting, especially when it can seem to repudiate established norms. But, if done the right way and with a trusted provider, change can be good for everyone involved: employees, employers, and payroll professionals.
In my position in product development, it’s critical to understand the challenges payroll professionals face on a daily basis. I’ve had so many conversations with your colleagues and the questions we typically hear include:
- If I do implement EWA, will it change existing payroll processes?
- Will it increase my team’s workload?
- Will it increase calls from employees? And if they do call, will I be able to easily access the information I need to help them?
- And most importantly, do my employees really want this and will they be motivated to adopt it?
Here are four key thoughts to help address these common EWA questions.
Time Is Money, Money Is Time
Earned Wage Access platforms were created with the intent for the payroll professional to not even notice they were there — in a good way. Seamlessly integrating into all the major payroll systems easily and efficiently is generally how EWA solutions make that happen. This allows employers to offer EWA while still maintaining their standard payroll distribution schedule.
Some EWA providers only require information needed to verify employment, verify direct deposit accounts and verify earnings information. This data makes it easy for employees to enroll by simplifying employment verification. Once employees enroll, they are immediately presented with accurate information about their earnings with the ability to access earned wages should they need to — even throughout pay period transitions. This provides employees with the knowledge of exactly how much they have earned, empowering them to make the best financial decisions for themselves or family.
Some providers have even created features to combat the time-consuming off-cycle payment to extend EWA capabilities to increase operational efficiency. Companies spend an abundance of time and money each year making payments outside of their usual payroll schedule. This labor-intensive process often features the creation of paper checks for bonuses, termination pay or to make other necessary off-cycle payments to employees. The creation of the paper check and the costs to overnight it to the recipient can cost upwards of $50 each. DailyPay’s Cycle allows the disbursement of electronic off-cycle payroll payments, instead of waiting for a paper check to be processed, distributed and cashed.
Is the Juice Worth the Squeeze?
It’s estimated that the total cost to hire a new employee can be three to four times the position’s salary.1 However, with earned wage access, research shows that employees stay longer on the job, thus reducing the pricey expense of constantly filling vacant positions.
According to Hanover Research, 95% of companies offering an EWA solution today believe it has a positive impact on employee retention. 2
And according to Harvard Business Review, employees who stay longer at a job are more productive.3 So the combination of lower recruiting costs, the impact of more experienced and engaged employees, and increased operational efficiency for payroll teams can drive significant savings for a company.
Will My Company Have To Fund the EWA Payments?
With some Earned Wage Access providers, you won’t incur any risk of there being an impact on your company’s cash flow because most solutions don’t have any pre-funding requirements for employers. It’s critical to work with a trusted partner that can scale with your organization.
Will My Employees Even Find EWA Useful?
EWA has emerged as one of the most adopted benefits, outside of health benefits. It’s become the expected way to get paid. In fact, according to a study from ADP, 75% of surveyed millennials say that the availability of earned wage access would influence their acceptance of a job offer.4
The two-week pay cycle is a paradigm that has been ingrained into our work culture since World War II. But the marriage of technology and the expectations of an ‘on-demand’ world has changed the way people will be paid forever. Today’s worker understands this. And more and more, forward-thinking employers do as well. So who’s getting the top talent in one of the tightest labor markets in recent memory… your company or your competitors offering EWA today?
2 Hanover Research Study: Companies with EWA Solutions, September 2023 :DailyPay, 2020
3 Harvard Business Review:DailyPay, 2020
4 ADP EWA Whitepaper :DailyPay, 2020