Early paycheck is a term used to describe the receipt of employees’ paychecks before the official payday. Employers choose this option because it allows them to save money on processing payments through banks and other financial institutions. However, apart from saving on the costs of paying their employees, there are many other benefits that companies can get by implementing this policy as well.
The Impact of Early Paycheck
Early paycheck can also be beneficial for both employees and employers. For employees, it helps them plan for their future expenses with ease. This is helpful, especially when there are unexpected bills or other emergencies that come up in life.
Employees can avoid late fees because they’re aware of the date their paychecks will be disbursed, so they won’t have to wait until the day before payday to pay bills like utilities or credit cards. Some banks can even help you set up income direct deposit 2 days early. In the case of SoFi, as per their experts, “All you need to do is set up direct deposit to your SoFi Checking and Savings or Samsung Money by SoFi account.”
Employees who get paid early can also save more money than those who don’t receive their checks until closer to the end of every month. They also have more flexibility with budgeting overall because they have time on their side when managing budgets throughout each week or month, depending on their paycheck schedule (weekly vs. bi-weekly vs. monthly).
Increase in Employee Productivity
If your employees are satisfied with their paycheck, you can expect that they will increase their productivity. They won’t want to waste time doing unnecessary tasks when they could be working on something more important.
Additionally, a happy employee is more likely to be productive because they feel like they are a valued team member and not just another cog in the wheel. This will lead them to have better retention rates which means less time spent training new hires and more money saved in training costs.
Chance of Increased Savings
Even if you don’t have the money in your checking account to pay your bills on time, you can still avoid the fines and fees associated with paying late. With a direct deposit two days earlier, you won’t have to worry about forgetting to take care of it. The immediate gratification of receiving that paycheck will encourage employees to be more productive at work and therefore increase their happiness and productivity levels. In addition, employees who do not receive their paychecks on time due to delayed payments often face penalties from creditors when they cannot pay their bills in full.
Avoidance of Late Fees
Early paycheck also helps you to avoid late fees and interest charges. Late fees are the charges charged by your bank or other credit institutions for payments made after the due date of your loan payment or any other bill. Interest charges are those paid by an individual for borrowing money from a lender on a fixed basis over time. These interest rates may vary depending on various factors like country-wise, the financial status of the borrower and so on. Once you pay off your debt before its due date, then you will not have to face these additional expenses which would have been otherwise incurred by defaulting in repaying that amount in time.
The results of this experiment show that an early paycheck has a positive impact on employee productivity. The findings are consistent with extensive evidence showing that people prefer to receive their rewards sooner rather than later, especially in circumstances where they expect the delay to be negative.