At a time when talent is at a premium, speedy payment options can be a competitive advantage.
Businesses’ outdated payment systems can find themselves contending with delays and errors that can quickly result in financial hardship for employees. And for freelancers and contractors, those problems are usually more frequent, according to “Expanding Payments Choice,” a PYMNTS and Onbe collaboration.
Get the report: Expanding Payments Choice
That’s especially troubling for workers who lack benefits afforded to full-time staff and rely entirely on timely payments for their livelihood. By granting them access to their wages the moment they are earned, and thereby helping address their potential financial hardships, digital payments could significantly influence employment decisions and retention.
An Onbe survey of more than 650 U.S. workers found that hiring freelancers is crucial to ensuring productivity and preventing burnout. But it only works if these freelancers are paid accurately, on time and through the payment method of their choice. Forty-one percent of survey respondents who identified as freelancers desired biweekly or weekly pay rather than monthly pay or payment upon completion of contract.
Mitigating Payroll Errors and Delays
Payroll may seem like a simple operation, but multiple obstacles can stand in the way of paying workers accurately and on time. The single largest culprit is a reliance on outdated manual payroll processes. One survey found that two-thirds of companies complete at least some of these processes solely with human staff.
One solution that is quickly gaining ground to mitigate payroll errors and delays is instant payments, where workers are paid immediately after their shifts rather than waiting for a designated pay period.
When it comes to faster payments, there’s a dawning awareness that for different consumers and businesses, speed goes both ways and the definition of “fast” varies widely, Onbe CEO Bala Janakiraman told PYMNTS in a May interview.
“There is a reciprocal equation when you and I, as consumers, want to get our loyalty payment, our incentive payment, our refund payment, our workforce payment,” Janakiraman said. “I want to get it as quickly as possible in the method that I’m most comfortable with as a recipient.”
Making Instant Payroll a Reality
Implementing instant payroll is hardly automatic, but various solutions are available to make it a reality.
One option is a physical or online debit card. Workers can transfer their earnings to their bank accounts, cash them out via an ATM or spend them using the card like any other debit card at retailers and merchants.
Other companies leverage The Clearing House’s RTP network, depositing funds into employees’ bank accounts immediately after each shift or gig rather than at the end of a pay period.
Whichever option employers choose, instant payroll is a slam dunk from both an employer and employee perspective. It gives workers more financial stability, while companies can enjoy the benefits of reduced turnover and a happier workforce.