With the 9th September marking the annual UK Savings Week, people and employers across the country are looking at ways to be more financially savvy. Although guidance and advice on how to make the most of savings is certainly going to be valuable, there are other ways that businesses in particular can help their employees better manage money and expenditure. That includes making more of the opportunities that payroll innovation has brought to the table in recent years.
The payroll function has long been deemed a transactional part of any business. Its core role is to ensure staff are paid correctly and on time. However, technological evolution means it can now do so much more to help people with their own financial wellbeing and money management.
Over recent years, more innovative models of paying employees have emerged, like pay-to-card and pay-on-demand, or earned wage access (EWA) which are now at the forefront of the world of payroll. The former allows employers to sidestep admin-heavy processes involved with setting up the likes of BACS payments and is growing in popularity. However, it’s EWA that is really having an impact, not just on individual users but also entire organisations.
EWA essentially enables workers to access their accrued earnings as and when they are needed, rather than having to wait for traditional weekly or monthly pay cycles. This immediacy is available in all other walks of life. After all, you can watch any film or TV series ever made, whenever you wish, and can access music, food and shopping instantly, wherever you are, from the palm of your hand.
For people across the country who are struggling with regular savings, but also facing unexpected payment costs part-way through the month, the ability to access their salary ahead of pay day can have a significantly positive impact on them. Not only does it prevent the unnecessary cost of expensive loans to cover one-off expenses, but it also boost mental and financial wellbeing. It helps to create a better relationship with money for individuals who are struggling or find themselves in a difficult position.
Making the most of payroll innovation like this also provides a wealth of benefits for businesses themselves. It’s no secret that a growing number of employers are battling skills shortages in the UK. This has meant the challenges of recruitment and retention have never been more important and central to organisational success. Employers need to find new ways to both source new skills and to keep hold of their top performers – and costly pay rises aren’t a sustainable solution.
Instead, firms are having to look at how attractive their benefits packages are for talent pools. Although gym memberships and childcare support are appealing, they are targeted at specific individuals. However, offering mor flexible and instant access to pay is something that will appeal to the masses, particularly given the continued increase in cost of living expenditure. When we also consider that an increasing number of professionals across the country are choosing more flexible employment models such as gig or contract work that allow for instant access to funds, the ability to offer this to permanent employees as well will certainly have its benefits.
If companies are also to set themselves up for the best possible success with engaging emerging generations, then they need to rethink how they ‘sell’ payroll processes and financial support to this demographic. Younger workers often prioritise greater levels of financial freedom over career progression. As already mentioned, offering greater levels of pay may not be an option, but more regular access to funds will certainly appeal. It also helps to position organisations as forward-thinking and employee-focused, which can aid employer brand positioning for firms. More younger generations, in particular, want to work with forward-thinking companies that put a focus on technology, and adopting options like EWA can support this wider image.
Organisations also gain from improved productivity and engagement levels across the workforce by taking a more modern view on how pay is managed. Financial stress doesn’t just have an impact at home, but at work too, and can have a knock-on effect on productivity and performance. Providing more support to staff to help them navigate these issues will boost employee loyalty, as well as being simply the right thing to do.
That’s not to say integrating new pay models into an organisation is entirely free of challenges. Employers need to ensure they have adequate processes in place to manage compliance and regulatory requirements, and that their finances can flex to deal with alternative pay cycles, which does require a degree of preparation.
However, it’s fair to say that the benefits outweigh the risks. So, for firms that are looking at how they can help staff better manage their finances and savings, I’d urge them to look at what more they can do beyond advice and guidance.
Borja Perez
Borja Perez is VP Products, Payments at CloudPay, the leading global payroll specialist. Borja began his career at PwC before moving on to work for other global organisations, including IBM. He has worked with CloudPay since 2020 and in his current position is heavily involved in shaping the modern pay experience for the global network of businesses that the firm partners with.
