A staple employee benefit that’s been around for more than a hundred years, employee relief funds (ERFs) are charitable initiatives offered by most large corporations and many medium and small businesses. Because unexpected financial burdens can impact an employee in terms of morale, performance, and absenteeism, ERFs work to prevent employee turnover and costs. If an unexpected or undue hardship strikes—for example, a one-time medical emergency or natural disaster—the employee can apply to draw upon the ERF. But the request, approval, and funds-flow process is outdated, often paper-based, and slow.
Thanks to advancements in technology, it’s now possible to automate and digitize this workflow, though few companies have the appetite to take this on as a stand-alone project. The traditional process of having an employee submit a request form, have HR take it to the CFO for approval, and file a request with payroll to disburse the funds, is time-consuming. For employees experiencing financial distress, waiting through this process can be painful.
Earned wage access (EWA) was developed to meet an entirely different employee need. Whereas ERFs are critical to mitigating one-time costly emergencies like a $30,000 medical procedure, or a house that floods and is uninsured, EWA helps employees meet smaller, sometimes recurring, financial obligations that simply don’t follow biweekly or monthly payroll cycles. For the 78% of Americans living paycheck to paycheck, EWA helps keep them away from the grip of predatory lenders, and out of cycles of debt.
Though EWA is a solution designed to solve a different category of needs than ERFs, the advanced technology that enables EWA creates an opportunity—a digital doorway to ERFs. EWA leverages seamless integrations with payroll systems and financial institutions like VISA, to deliver requested funds within minutes or seconds. This underlying EWA technology can also be used to expedite the ERF workflow and put money in employees’ hands quickly, when they need it most.
These days, implementing an EWA solution is an easy, seamless process, requiring little effort on the part of an employer. Once those connections into your payroll system are made, those same connections can be used to expedite any approved financial disbursement, whenever it’s needed. Instead of a lengthy traditional ERF workflow, employees would be able to submit a request for emergency funds to their HR department through the EWA app, and an HR professional would be able to review the request online and forward it to the CFO. Once approved, the emergency funds could immediately be released to the employees’ bank account or an approved debit card.
The streamlined approval process and flow of funds can revolutionize the way companies come to their employees’ aid when they need it the most. An EWA integration enables electronic approval and expedites the entire ERF process. The best part is that EWA integration is possible with minimal effort and without any resource investment.
This time of year especially, businesses need to be cognizant of their employees’ ongoing financial needs and stresses and plan for their unforeseen financial emergencies. With an EWA integration that expedites ERF disbursements when they’re needed, employers can do both. The current global pandemic and the pressures of the holiday season are compounding the high risk of financial stress impacting employee performance. However, by proactively implementing technology workflows that empower employees to access necessary funds when they need them, companies can prevent potential negative outcomes and help their businesses come out of 2020 with a healthy, motivated workforce. For more information or if you have questions, reach out to me at [email protected].
Mason Beard – Chief Strategy Officer, Immediate