6 Ways to Ensure Your On-Demand Pay Program is a Success
As we continue to navigate “the new normal,” many companies are working overtime to save on time and cost in order to make up for lost proﬁts. The economy remains 3.5% below its level at the end of 2019 and incomes plunged in the third quarter, suggesting we have a ways to go before we’re truly back “business as usual.”
In the meantime, it is a prudent decision to look for eﬃciencies, digitize operations and maximize employee productivity. One easy, actionable way to do all three? Implement an on-demand pay program. On-demand pay has been proven to reduce employee turnover, boost hiring and encourage worker productivity. But not all on-demand pay programs are created equal, and some will require more work from your payroll and HR teams to maintain. To reap the rewards of on-demand pay without the extra legwork, evaluate these six key criteria:
- How much work will my payroll and HR teams need to do to service the on-demand pay program?
Diﬀerent on-demand pay oﬀerings require varying levels of involvement from your payroll and HR teams. If your team doesn’t have the bandwidth (or desire) to take on additional workstreams to run an on-demand pay program, look for a vendor that provides a dedicated Account Management oﬀer a dedicated Account Manager that will provide an Agency-grade rollout plan, including customized materials that will provide employees with a seamless, on-brand experience every step of the way.
It is also a good idea to evaluate the vendor’s automations capabilities. Some oﬀerings require your payroll team to manually approve employee hours, for example, which essentially translates into your company running payroll daily. Aside from possible tax implications, this can introduce additional compliance and discriminatory risk.
- Does the vendor oﬀer “full” on-demand pay?
Industry leaders oﬀer users the most advanced features of on-demand pay, such as 100% access to funds, instant access and ﬂexibility with any destination account (versus requiring a particular paycard to use with the program, for example). As on-demand pay grows in popularity and employees learn more about its maximum capabilities, they may wonder why you introduced a program with arbitrary limits such as 50% access to funds.
- Who can employees go to for help with the program?
When it comes to pay, questions from employees are inevitable, but they’re likely to occur around payday. When employees have access to pay anytime, however, the support requests can also pop up anytime. To free up your payroll team from handling them, choose an on-demand pay vendor with a dedicated support team. Best-in-class providers will oﬀer digital support as well as live call center support.
- Is the on-demand pay program compatible with any payroll system?
Choosing an on-demand pay vendor, implementing the program and promoting it to your workforce is no easy feat. To make sure your employees can enjoy the beneﬁt without interruptions, choose a provider that can work with any payroll / TMS setup. This ensures that even if you elect to change payroll systems, your employees won’t lose access to their on-demand pay beneﬁt. Nearly 20% of DailyPay clients changed payroll providers changed payroll providers in the last year, and every single one of their employees was able to enjoy the daily pay beneﬁt without interruption.
- Who funds the on-demand pay program?
If your company has to fund the on-demand pay program, the IRS takes the view that this is tantamount to running payroll, and consequently, your company will owe tax withholding when an employee requests an on-demand pay transfer within the pay period. To avoid the compliance risk and hassle that comes from funding an on-demand pay program yourself, look for a vendor who funds the program.
While vendor-funded programs avoid this compliance risk, it’s important to evaluate how the vendor is funding the program. Programs that have a dedicated line of ﬁnancing will not impact your payroll process, but if the vendor acts as a commercial lender, for example, your ﬁnancial team may need to jump through hoops such as checking your charter and governing documents regarding debt incurrence and checking your existing equity documents.
- Does the program oﬀer ﬁnancial wellness tools to employees?
The goal of any on-demand pay program should be to help your employees achieve ﬁnancial stability. While ondemand pay itself is a key driver behind whether or not an employee can meet her ﬁnancial obligations and avoid payday loans, other features can help employees develop good ﬁnancial habits. Some vendors oﬀer savings and budgeting tools to help users do just that, but it’s important to carefully evaluate these features. For example: Are they free? Can users earn interest on their savings? The answers to these questions can have a signiﬁcant impact on program adoption, which is critical to making a lasting impact. As businesses across the nation work to recover from the pandemic, implementing on-demand pay is an impactful way to save on time and cost, while helping your workforce achieve ﬁnancial stability. But in order to make sure you and your employees get the most out of your program, be sure to choose a vendor with a gold standard oﬀering — one that won’t impact your payroll team’s workﬂow, but that will be adopted and loved by your employees.
ABOUT THE AUTHOR
Jeanniey Walden builds companies from start-up to global success. Her skill in recognizing and capitalizing on new markets in a way that results in driving consumer adopon of new products in those markets is unparalleled. She is the Chief Innovaon and Markeng Oﬃcer for DailyPay, was previously the Global Chief Markeng Oﬃcer for Mercer, and the co-founder of ringblingz™, a line of fun and fashionable connected devices ( part of the R/GA Accelerator powered by TechStars).
One of the most experienced, accomplished, and respected women in marketing, Jeanniey’s experience spans from start-ups to Fortune 100 companies including her role as the Global EVP, CMO for Zinio, Founder of the Email Experience Council, Executive Director, Digital Dialogue, OgilvyOne, and Corporate Director at JCPenney to name a few. Jeanniey has also authored and contributed to multiple books, blogs and magazine articles.