An interesting interview on Radio 4’s You and Yours on 28th August outlined the action that many employers are now instigating to help staff with their finances. Salary advances through a number of companies allow employees to apply (via an app) for an advance on their monthly salary to help with unexpected or emergency costs.
85% of the population is paid on a monthly basis, but how often do those unexpected or urgent demands on our finances fall outside the “pay” window?
Accessing your own money a little early
The ability to access earned money rather than having to wait until the end of the month means that there is less reliance on overdrafts or payday loans, which impact so drastically on the financial wellbeing of employees, and ultimately can go on to have negative consequences for their overall mental health.
Because the “lenders” are dealing directly with the employers it is cheaper to administer and the employer can decide how much is available to issue, to avoid staff getting into further financial difficulty. They also have all the personal data on their staff which makes for a quicker turnaround, and because they should know their staff situations in more depth, they can appreciate the demands on the individuals.
Difference in costs for the individual against the usual interest rate
The typical customer of the payday lenders are those in employment, with families, who borrow on average £250. The repayment via the traditional route is usually around £430 – 72% in interest.
With these new salary advance companies, the charge is £1.75 per transaction!
BT, Virgin and a number of NHS Trusts are already using these new facilities to support staff and by applying through an app helps to take away the embarrassment of “asking for an advance” that can impede people from asking for help.
Employers supporting mental and financial wellbeing of staff
Typical uses are for things like getting a season ticket for travel, allowing them to get to work, without impacting adversely on their pockets if they have to wait until the end of the month for the money to come in.
It avoids the “robbing Peter to pay Paul” situations that so many find themselves in.
This simple adjustment helps employers to actively support staff financial health and well-being which has such a dramatic and forceful impact on their overall productivity and quality of life.
More details can be found on the You and Yours link below:
Operations Director at Athelbrae Ltd, Silver Winner 2019 National Family Business Awards …