Payroll Insights
September 12, 2023

The unexpected retention and productivity driver you're probably overlooking

Here are four common misconceptions that CEOs and CFOs have about on-demand pay – and why overlooking it could harm retention and productivity


Providing your employees with a financial wellness benefit like on-demand pay is valuable for your organization's success. However, many organizations aren’t offering it due to common misconceptions about how it works and its impact on employees.

Organizations that delay investing in on-demand pay could miss out on opportunities to retain talent, improve productivity, and compete for in-demand workers. Here are a few common misconceptions about how on-demand pay works and the truth behind this often-overlooked employee offering.  

Misconception: Employees will misuse on-demand pay and not have any funds left on their traditional pay day

Truth: The right on-demand pay provider can help safeguard employees from over-drawing funds, while giving them more flexibility to control their finances – which is far less damaging than going into debt.

Imagine an employee who lives paycheck to paycheck is suddenly overwhelmed by an unexpected car payment. They need their car to get to and from work but don’t have access to funds to pay the bill right away, causing them to seek out a payday loan or rack up high interest credit.

How does this affect your organization’s performance? The more financially stressed your people are, the less productive they are at work. A different study of North American workers conducted by The Harris Poll on behalf of Ceridian found that 82% of workers spend time thinking about their personal finances during the workday.1 And for 12% of those workers, that time spent is over two hours every day – they may be physically present, but you’re still losing that productivity.

On-demand pay offers an alternative to debt in situations like this emergency car repair. An SSRS study conducted in partnership with Ceridian on Dayforce Wallet users found that 50% planned to use their earned wage access to pay their household expenses, and 43% planned to pay for emergency expenses in the coming months.2

The right on-demand pay vendor will offer configurable parameters and blackout periods to prevent employees from overdrawing their earned funds. This provides a buffer for employees to avoid withdrawing all of their pay before their traditional payday – making on-demand pay a much better option for cash-strapped employees.

Misconception: Adopting on-demand pay will cause extra work for our quarterly and year-end processes

Truth: Deploying on-demand pay across your organization shouldn’t be a big undertaking for your team, but rather a streamlined process with minimal effort.

Here is where understanding the differences between a third-party provider and a native provider is helpful. For example, with a native provider like Dayforce Wallet, earned wage access is as reliable and accurate as traditional pay methods, since it uses always-on calculation of net pay for easy access to real-time data. This approach minimizes the number of audits and reconciliations that would take place if using two different data engines with a third-party provider.

Implementing a native on-demand pay solution with always-on calculation means there's no additional accounting work or documentation, lowering the risk of issues or potential audits too. Using the same platform for standard and on-demand payroll means payroll administrators and employees can rely on a single source of truth for payroll data. In some cases, this even enables on-demand pay technologies to automatically generate earning statements for every on-demand payment, meaning no extra paperwork for the payroll team.

Organizations that partner with a native on-demand pay provider, instead of a third-party provider, benefit from a real-time payroll data feed to keep your records clean and provide an accurate picture of payroll throughout the pay cycle. This also enables a more seamless integration for your account systems and general ledger. Plus, the right technology may be equipped with the ability to automatically commit off-cycles to capture payroll calculated between the end of the previous pay cycle and quarter end, so payroll teams have one less thing to worry about when closing out the quarter.

Simply put, your focus is on increasing productivity, not decreasing it, and your on-demand pay partner should support that. It’s important to find a solution that doesn’t require extra attention, a stressful implementation, or additional steps by any member of your team.

Misconception: Offering on-demand pay to our employees will have a significant impact on our cash flow

Truth: With the right technology partner and commercial model, on-demand pay shouldn’t have any impact on your day-to-day cash flow.  

This is a common concern among chief financial officers who are considering on-demand pay and are worried about the implications for payroll funding. A real-time on-demand pay solution will simply enable faster or earlier delivery of payroll into employee bank accounts. This means that customers’ billing obligations and total payroll funding owed at the end of the billing cycle should remain unchanged. And if the solution is free to employers, there should ultimately be no impact on your cash flow or bottom line.

How do fee-free on-demand pay providers stay afloat? They typically rely on a merchant interchange model, through a partner card provider. This means employers can offer the benefit for free, employees can transact for free, and the card provider makes a small fee off merchants accepting the provider’s card.

Employers shouldn’t have to pay a fee to provide their employees with access to funds they have already earned. Not all on-demand pay partners are built the same and, in our opinion, there should be no hidden fees for the employee or the employer, and no hidden maintenance costs.

Misconception: Employees aren’t asking for on-demand pay, so they probably don’t need it

Truth: Your employees may not be reaching out about on-demand pay specifically, because they may not be aware of it – yet.

Since there are more payday loan storefronts across the U.S. today than there are McDonald’s or Starbucks, payday loans and high interest credit cards are likely more front-of-mind options to help employees with their financial stress. However, those options are often more detrimental to financial well-being than they are helpful.

Just because your people may not be aware of on-demand pay doesn’t mean they wouldn’t greatly benefit from it personally and professionally. The same SSRS study mentioned above found 70% of Dayforce Wallet users report a positive impact on their mental health because of this benefit and 90% of those respondents check their account weekly or more.3

Offering your employees access to their earned wages can not only increase their financial empowerment and confidence, but, as a result, increase their loyalty to your organization and their work performance. Adding on-demand pay as a point of differentiation can help ﷟attract top talent and increase retention among your current employees. In a recent survey on Dayforce Wallet users aged 18-29, 45% said one reason they’re staying with their current employer is because they offer Dayforce Wallet, and 20% say they wouldn’t work for an employer that didn’t offer on-demand pay.4

With the workforce more financially stressed than ever before, investing in a strategic financial wellness offering, like on-demand pay, could benefit both sides of your organization. On-demand pay provides a powerful vehicle for increasing productivity and retention, while driving your organization to new levels of success.

Read more on how to drive retention with the right on-demand pay partner and what to look for when evaluating your top vendors.

[1] The Harris Poll North American Study on behalf of Ceridian, 2022

[2] SSRS Research Study on Dayforce Wallet users conducted on behalf of Ceridian, December 2022

[3] SSRS Research Study on Dayforce Wallet users conducted on behalf of Ceridian, December 2022

[4] SSRS Research Study on Dayforce Wallet users conducted on behalf of Ceridian, December 2022

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