The Business Benefits of Earned Wage Access: A Game-Changer for South African Companies
Already established in the USA and other countries abroad, Earned Wage Access (EWA) is now also recognised in the South African market as a groundbreaking financial service. From a business perspective, there are a multitude of benefits attached to adopting EWA. Three examples are highlighted in this article: reduced employee turnover, increased productivity and greater payroll efficiency.
1. Reduced Employee Turnover:
High turnover is not good for business. It can contribute to decreased team morale, lower productivity while replacements are found, and at worst, consistently high turnover rates may cause reputational damage to the brand. High turnover is also expensive. Conservative estimates place the cost of replacing a single employee at one-half to two times their annual salary. Multiply this by employee turnover rates, and these costs quickly wrack up. But there is also a solution. According to financial services giant Ernst & Young, 20% of employee turnover is due to financial stress. This means that if employers offer benefits programs such as earned wage access, employee turnover can be reduced by 20%. Such programs also cultivate a positive relationship between employers and employees, fostering the notion that HR really does care. And workers are far more likely to remain loyal to a company which demonstrates this through supporting their financial well-being, thereby reducing turnover rates. This is supported by research from KPMG, which reports a 20% reduction in employee turnover in companies which implement EWA.
2. Increased Employee Engagement and Productivity
Employee engagement is clearly a business issue, as it has a direct impact on bottom line. But the state of an employee’s finances does not obviously fall within the employer’s realm of responsibility. However, according to workplace expert Gallup, employee engagement and wellbeing are directly linked. Employees can be easily distracted by stress and worry, especially over finances, which reduces their capacity at work. If there is no food on the table at home, employees will be distracted by worry (and potentially hunger as well). If there is no money for transport, some have no choice but to skip work that day (the beginning of a very slippery slope). But when employees are empowered by financial wellness initiatives, they are given back control of their lives. Financial stress can now be delt with, allowing employees to focus on their roles and perform better. Ultimately, productivity within the organization feels the benefit as well. And as an added bonus, delinquent behaviour is also likely to reduce when employees have ready access to other sources of cash.
3. Streamlined Payroll and Administrative Efficiencies
It may sound counter-intuitive, but implementing EWA can actually improve payroll processes. For a start, payroll workload is reduced. Offering EWA to employees means there is no longer a need for in-house salary advance systems – all advances are handled by the EWA provider. And because these ‘advances’ are actually just access to already-earned wages, the financial risk posed by employees absconding is zero. Employees can only access money already owed to them, so there is never a point where company funds are at risk. There are also no cashflow issues, as the EWA provider bankrolls the cash-outs throughout the month, with a simple recon process at month-end. Moreover, EWA platforms like Paymenow are capable of digitally distributing payslips. This eliminates the costly process of distributing physical copies, and makes payslips easily accessible to dispersed workforces. This also reduces the risks of human error and potential fraud. And with an efficient process in place, HR is free to focus on more strategic initiatives, increasing operational efficiency.
Conclusion
Below are a few client testimonials of how earned wage access can improve your business. For further information on how Paymenow’s Earned Wage Access offering can add to your company’s employee offering, read more on our blog page, or contact us now!
