3 myths keeping your organization from the value of on-demand pay

Payroll is evolving to meet the challenges of today’s complexity crisis. The boundless workforce — where work is fluid, borderless, and always on — requires more payroll agility from organizations. On-demand pay is here and transforming the way people are paid, helping companies pay flexibly without adding steps to the pay cycle. But many payroll teams have reservations about implementing this new pay solution. Why? 

This piece will dive into three common on-demand pay myths that are keeping organizations from realizing its many benefits. 

What is on-demand pay?

In a traditional fixed pay cycle structure, employees’ cash flow is bound to disparate, often monthly, paydays. But this can be challenging, especially when pay cycles don’t align with expenses. Without easy access to pay, employees can be left in a difficult position, having to take out loans or dip into their savings to meet financial needs.    

On-demand pay, or “earned wage access,” is a modern pay solution that gives employees access to their earned wages between pay periods, whenever they need it most.

Benefits of on-demand pay

On-demand pay can play a major role in improving productivity. That’s because employee stress gets in the way of people doing their best work, and finances are often a major cause of stress. On-demand pay gives workers more control over their finances — a perk that employees themselves believe makes a difference. In a Dayforce study of 1,145 UK adults (aged 18+) conducted by The Harris Poll, over half of respondents (56%) said they believe their financial stress can be reduced through early access to earned wages.¹

Earned wage access can also help you attract talent. Offering real-time access to earned wages becomes a competitive differentiator for your employer brand. In the same research referenced above, 75% of UK adults aged 18–44 revealed that they are more likely to work for an employer who offers on-demand pay as opposed to an employer who does not.

Debunking common on-demand pay myths

Now that we've established the benefits of on-demand pay, it's time to address common misconceptions.

1. On-demand pay is costly and time-consuming to implement

The right provider can help you avoid long and costly implementations. With a native on-demand pay provider, the technology is already integrated into your current payroll software. So, even if your system is uniquely set up, the configuration is a straightforward process, requiring only a few hours to implement. Plus, the fast delivery can reduce project costs, making roll-out less stressful and more affordable.

2. On-demand pay will complicate the payroll process

Introducing on-demand pay doesn't have to be disruptive. With a native provider, you can maintain existing payroll processes without creating additional steps or disrupting cash flow.

A provider like Dayforce Wallet acts as an extension to Dayforce Payroll, so employees only have access to what they have truly earned to date in the pay period. Plus, Dayforce funds the intracycle payments on behalf of customers, minimizing the impact on both payroll processing and funding. Built on a foundation of continuous calculation, Dayforce Wallet is uniquely positioned to insulate payroll teams from an increase in workload, with taxes, deductions, arrestments, and other required payments accounted for in real-time.

3. Employees will misuse on-demand pay

Many employers fear that employees will use earned wage access irresponsibly, leading to inadequate funds to cover their expenses. But, with the right provider and financial education, you can empower employees to act responsibly and use on-demand pay to support their financial wellness rather than hinder it.

For example, Dayforce Wallet does not allow negative balances, meaning employees won’t find themselves without any pay at the end of the pay period. Plus, payroll administrators have access to a variety of settings and configurations around the timing, amounts, and earning codes available for on-demand pay withdrawals. With no catches and no hidden fees, on-demand pay is the simplest employee benefit you’ll ever offer.  

When used correctly, offering earned wage access can encourage employees to grow their financial health and have more financial flexibility.

With Dayforce Wallet, you can re-imagine your payroll and create a better experience for your people. Although implementing a new pay solution can seem overwhelming, with the right on-demand pay provider, you can help to improve your workforce productivity, employee engagement, and competitive advantage, without complicating your payroll process.