What did you think when you first heard about on demand pay?
When I first heard about the concept of on demand payments, I thought it sounded like a great idea in principle and I could definitely see the advantage of someone being able to access their cash earlier than payday.
We live in a world where people are used to having access to things instantly, and payroll doesn’t necessarily match that. I also thought on-demand pay could provide a safety net for a lot of people and doesn’t cost much to use unlike alternative sources people may use to access emergency cash.
For sectors like health and social care or hospitality, I can see how this would be of even more benefit as there are scenarios where employees might work a shift and not be paid for it until a month or so later depending on where it falls in the payroll cycle.
Did you have any concerns?
I did have some concerns from a payroll perspective in terms of how easy it would be to manage, how much manual work would be involved and whether there was a risk of overpaying employees.
Some of the initial questions that came to mind were how could we make sure that people didn’t try to use the service whilst we were processing final pay for the month as the final BACS file could then be out. Similarly, we didn’t want people using the service during the days where we would period end and post data to nominal accounts as we can’t have anything going through payroll and changing the final figures during this time.
What has been the reality of introducing on-demand pay?
It’s been really straightforward! We can set thresholds on how much employees can withdraw which ensures we can account for deductions like pension and benefits, which means there’s no risk of us overpaying someone. You can also set a cut-off date which allows us to make sure no one can use the service during payroll processing or period end. As the service is integrated, there’s really not a lot of ongoing admin to do.
For other payroll professionals considering on-demand pay for their organisation, I’d just highlight how easy the service is to use. It allows you to give a lot more flexibility to your staff with not a lot of change to your processes which seems like a win-win to me!