How Wagewell Assists in Optimising Working Capital for Employers
Effective working capital management is crucial for the financial health of any company. Among various expenditures, salaries constitute a significant portion of working capital. Managing this component efficiently can lead to substantial improvements in a company’s financial performance. One innovative solution that is gaining significant traction is On-Demand Pay. In this blog post, we’ll explore how partnering with a reputable On-Demand Pay provider, like Wagewell, can help optimise your working capital.
💰 Salary Disbursement & Working Capital:
Salaries are one of the biggest components of working capital in any organisation. Employers often face the challenge of handling emergency salary advance requests, which require maintaining a cash reserve. While it is socially responsible to support such requests, the funds set aside for salary advances act as a non-performing asset, not actively contributing to business growth. The unpredictability of these requests further complicates the situation, often limiting the employer’s ability to meet employee needs effectively.
🚀 Managing Working Capital More Effectively:
Re-channeling Funds in Working Capital
On-Demand Pay services are facilitated by third-party providers, such as Wagewell, who front the funds to employees. This means employers do not have to disrupt their payroll cycles or maintain a cash reserve to provide early salary access, freeing up working capital that can be redirected to other business initiatives and growth opportunities.
Extending Working Capital with Wagewell
One of Wagewell’s standout features is the ability to reconcile On-Demand Pay transactions four business days after an employer’s regular payday. This grace period extends the company’s working capital, providing a crucial buffer that allows businesses to manage cash flow more strategically without immediate cash outflows.
Direct Savings for Finance Teams
On-Demand Pay allows employees to access a portion of their accrued earnings as many times as they want between paydays. This reduces the administrative workload on finance teams, who otherwise would have to handle numerous ad-hoc advance requests. By offloading this responsibility to Wagewell, finance teams can focus on more strategic tasks, enhancing overall efficiency and productivity.
Mitigating Hidden Costs of Salary Advance Requests
Processing salary advances involves several steps: a request by the employee, evaluation by the HR team, approval, and subsequent disbursement of funds by the finance team. This process can take hours or even days, during which the employee remains stressed, often affecting their on-the-job performance. The time and resources spent on these admin-intensive tasks represent hidden costs that can be completely eliminated with On-Demand Pay.
💜 Unlocking Employee Financial Wellbeing:
Enhanced Employee Retention & Recruitment
High turnover rates can be extremely costly and disruptive for employers. On-Demand Pay is a powerful benefit that can help to attract and retain top talent. Employees who feel financially secure are more likely to stay with an employer, reducing turnover rates and the associated costs of hiring and training new staff.
Increased Employee Productivity
Financial stress is a major cause of distraction for employees. By providing access to accrued earnings before payday, employers can help reduce this stress, leading to increased focus and productivity at work. Employees who are less worried about their finances are proven to devote more energy and attention to their job responsibilities.
Reduced Absenteeism
Financial emergencies can lead to unplanned absences as employees take time off to handle pressing issues. On-Demand Pay can mitigate this problem by providing the funds needed to address unexpected expenses and emergencies promptly, reducing the likelihood of absenteeism and its negative impact on productivity.
Strengthened Employer-Employee Relationship
Offering On-Demand Pay demonstrates a commitment to employee welfare and financial well-being. This can enhance the employer-employee relationship, fostering a sense of loyalty and trust. Employees are more likely to feel valued and appreciated, which can translate into higher morale and a more positive workplace culture.
Conclusion:
As businesses in Kenya continue to navigate the challenges of today’s economic landscape, Wagewell’s zero-cost and risk-free On-Demand Pay solution safeguards working capital while empowering employees with financial flexibility. By working seamlessly and compliantly alongside existing payroll systems, HR and Finance teams do not face increased workload, allowing forward-thinking companies to roll out On-Demand Pay without any disruption to their current processes or cash flow.
To learn more about Wagewell and adding our revolutionary On-Demand Pay solution to your benefits package, please visit our website.
