Payday pressure: Finvex.tech’s flexible salary solutions to ease worker’s financial stress
The 30-day pay cycle has its origins in the Industrial Revolution. Employees do upfront work and wait to be paid for their labour at the end of the month. By being paid on a monthly cycle, employees in OECD countries are effectively lending their employers $1 trillion at any given time1.
Many workers are feeling the strain of this payday arrangement according to a recent EY survey1. More than 70% of workers surveyed regularly find it challenging to meet everyday expenses. Half of these workers struggled to meet an expense because it was due before they were paid and encountered this problem at least once every four months.
The negative impact payday pressure has on individuals is considerable: nearly 75% of those who have experienced financial difficulties reported a deterioration in their health and wellbeing1. This stress is carried into the workplace and presents as reduced performance, distraction, absenteeism and ultimately staff turnover. It is estimated that 20% of employee turnover is due to financial stress, carrying an employer cost of more than $300bn annually1.
There are three main causes of financial shortfalls which contribute to reduced financial wellbeing: emergencies, limited savings, and timing mismatches between income and expenses. Emergencies are unforeseeable by definition. Household savings, which are tied to income, have taken a turn for the worse. Globally real wage growth has diminished, which when coupled to growing household debt means today’s workforce is finding themselves in an ever growing precarious financial situation.
Flexible pay could help alleviate worker´s financial shortfalls. Finvex´s On-demand Pay solution gives employees access to a portion of their accrued pay in advance of payday, with the remaining portion paid at the end of the pay period. Unlike salary-based lending or payday loans, our solution does not involve borrowing on the part of the employee. We are merely allowing the employee access to a portion of their salary for days already worked.
Finvex integrates with virtually any payroll system. It’s easy and fast. We do the heavy lifting, so the employer doesn’t have to. There is no impact on cashflow. The employers normal payroll processes stay exactly the same. By giving staff access to their earnings, employers are able to attract talent, boost productivity, and improve staff retention. It’s a real win!
As one of the cheapest, most transparent and flexible ways of accessing liquidity, Finvex can help staff reduce reliance on short-term, higher cost credit. Access to earned income can give employees far greater control over their finances by enabling them to more effectively align income with expenses, allowing better budgeting and supporting their financial wellbeing.
With Finvex, it’s never been easier for employers to take care of their staff. And their business. Cost free! Contact us today to learn more.
1EY Employee Financial Wellbeing Survey, June 2020