Payday is on Friday, but your employee’s car breaks down on Tuesday.
For someone depending on that car to get to work, those three days feel like a very long time. They have put in their effort and have earned money for it. But they can’t access that money until payday arrives.
This is where earned wage access can come in handy.
For small business owners, it is something worth knowing about. And with the right setup, it can even work with the system you already use to manage your small business.
What Is Earned Wage Access?
Earned wage access (EWA) allows employees to receive some of their earned money before their normal payday. This can also be referred to as early wage access or on-demand pay.
The concept is very straightforward: it gives employees freedom of choosing when they get paid for the work they’ve already done.
It doesn’t increase their salary or pay them any bonuses. It only changes the timing.
How Early Access to Earned Wages Works
It may vary from one service provider to another, but here is an example of how the process takes place:
- An employee works the shift.
- The system gets the necessary information about the work or the payment information.
- The employee sees the amount that can be withdrawn in advance.
- They decide if they want to withdraw some of that money in advance.
- They are paid the rest of their salary on payday after deductions and any fees.
For instance, let’s assume that an employee’s salary was $700. If they took $100 in advance, there would be $600 left for payday.
That is something that needs to be explained from the beginning. The early payment is part of the paycheck and not a bonus.
Why Employees May Value Early Pay
Paychecks do not always line up with bills. The same goes for flat tires, educational fees, or an empty gas tank.
Often, the problem is timing.
More Room to Handle Everyday Costs
Earned wage access might help someone cover a needed expense before payday. Based on the fees involved, this can help them avoid being late in payment or having overdrafts.
It won’t help with all money problems, but an additional solution can be crucial when the fridge is empty and payday is still a few days away.
A More Private Way to Ask for Help
Approaching the boss and asking for a pay advance can be embarrassing.
With a system that enables employees to make requests on their own, it won’t require an employee to share their money problems with the boss. They can simply see what is available and decide whether to use it.
Some employees can use it frequently while others will just appreciate that it is available.
What Earned Wage Access Means for Small Businesses
To run a restaurant, a shop, or a service-oriented business, one should always consider the people who work each shift. When choosing a restaurant POS system, it is important to consider both the employees’ needs and the sales.
Early wage access is just another tool to serve your people.
A Benefit Worth Talking About
When hiring, owners tend to care about hourly wages and schedules. These factors will always be important. However, the possibility of earning pay earlier could be attractive for candidates as well.
This will provide you with another advantage to highlight during the interview process. Your employees might feel appreciated as well.
However, no single benefit will make your candidate stick around. Just like with any other business, fair pay and good management are very important.
How Earned Wage Access Fits With POS Solutions
Your point of sale may be not only used for payment processing, but also tracking hours and working with payroll software.
That connection can help to offer earned wage access if there are compatible services provided. The specific relationship between the POS system, payroll, and the wage access service plays an important role.
Card Systems offers earned wage access through its POS system solutions. For a business interested in this benefit, the first thing to do is to review the current setup.
Not all POS systems work with all programs. Ask how many hours are calculated, when the earnings appear, and who is going to answer questions for employees.
What to Check Before Offering Early Wage Access
An effective employee benefit must be easy to understand.
Fees, Timing, and Payday Expectations
Before deciding on a program, you should ask:
- Are there any costs for the business or the employees?
- Is a free transfer option available?
- How long does it take to transfer money?
- How much earned pay can employees access?
- How will early pay be reflected in the payroll report?
- Who should you contact in case of delays or errors in payments?
Inform your employees that using early pay service means less money on the payday.
Exploring Early Wage Access for Your Team
You do not have to wait until an employee has a financial emergency to discuss this service.
If you own a business in Cape Coral, Fort Myers, or other parts of Southwest Florida, contact Card Systems to get help setting up earned wage access through our POS systems. Start by checking your current system and the needs of your team. From there, you can decide whether early pay is good for your business.
