What is a Salary Advance? What is Salary Finance?
A Salary advance is a new concept that is becoming more and more popular in 2021. The idea is that an employee is able to take money out of their monthly paycheck and receive it instantly instead of having to wait until the end of the month. Often using simple mobile apps, employees can decide to take however much they want out of their monthly salary without it affecting the employer.
Salary Advance Companies are quickly replacing standard pay-day loans as employees are not credit checked and are not subject to interest or debt when using Salary Advance companies.
For those employees who run into unexpected expense trouble during the month, salary advance software and companies give them the opportunity to relieve some financial pressure without it turning into high amounts of debt. A salary advance simply allows the employee to access money that they have already earned without receiving the full amount at the end of the month.
Why Should I Use a Salary Advance Company?
Using a Salary Advance company has benefits for both the employee and the employer. For the employee the benefits are clear; employees can access money they have earned earlier than before without having to pay back money and lock themselves into ever-increasing debt. It is cheaper than the alternatives and employees are not subject to credit checks.
For the employer it makes your company more attractive for employees; it is a great perk for your business to offer and will help improve your hiring process as well as reduce staff turnover. More importantly, providing a salary advance to your employees will increase their happiness and put them under less financial pressure. This, in turn, could lead to employees becoming more productive when they are not worrying about money throughout the day.
How Do Salary Advance Companies Work?
As it is still a relatively new concept, salary advance companies differ in how they operate. Some companies will charge the employer for using their service and most will charge a fee to the employee when they take out money from their salary early. Some companies even offer loans for employees at a much lower rate than a normal financial loan.
Once the employer has registered with one of these companies, employees will be able to download an app which will show them how much they have earned and how much they can take out. Employers are able to decide how much of an employees earned salary they can take out with many capping withdrawals at 50% of earned money.
Salary Advance Companies are becoming more popular and for that reason TechRound has found the top 5 Salary Advance Companies that you should be using whether you are an employer or an employee:
Top 5 Salary Advance Companies:
- Salary Finance
Wagestream is currently the most popular Salary Advance company used in the United Kingdom. With companies such as Bupa, Cafe Rouge and others using Wagestream to give their employees an opportunity to access their salary early. Wagestream has an easy to use mobile app which allows employees just to track their wage if they want to. Wagestream also offers its users financial education services, including tips on how to save money and decode their payslip.
Employees are able to access 50% of their monthly salary early and are charged just £1.75 per advance. Wagestream is currently the most efficient Salary Advance company.
Hastee Pay deals solely with Salary Advances and actually allows the employee to access up to £100 per month for free. Employers will give their employees an invitation code to download the app after which they will be able to see how much they can borrow, employers can set a maximum withdrawal amount but Hastee does not have a limit on this.
Some NHS trusts use Hastee but Hastee does charge employees 2.5% of all money that is taken as an advance from the employees salary. This can make Hastee one of the more expensive options for a Salary Advance company.
3: Salary Finance
Salary Finance does a lot more than just Salary Advances however they do also offer a great Salary Advance scheme. Although Salary Finance does not have a mobile app instead you can log onto your account on the website to keep a track in real time on what you are earning and what you can borrow. On there they have guides and tips on all things monetary with help saving as well as recommendations of insurance providers.
Employees are limited to 3 withdrawals a month and Salary Finance charges a £1.49 per advance taken. Many reputable brands and companies use Salary Finance and it is a great option as a Salary Advance company.
4: Revolut Payday
Fintech company Revolut are the latest company to become involved with Salary Advances launching Revolut Payday. Revolut Payday tracks your wages in real time so that you can check on your mobile app straight after a shift to see how much you have earned. With Payday you will be able to withdraw up to 50% of what you have earned at any time and the employee is charged £1.50 per transaction.
Revolut is a reliable business and its foray into the Salary Advance market shows that this is truly an up and coming industry. Although extremely new Revolut Payday allows employees to avoid using their credit cards or payday loans when they are having financial worries.
Neyber is slightly different to the other Salary Advance companies on this list because Neyber has not made the full transition to Salary Advances yet. This means that when you take some of your salary early with Neyber you are technically still getting a loan. Employees do not owe money to their employer but to the company and this means that credit scores are affected and interest rates can be charged.
However, because the money that is borrowed then comes straight back out of your salary, Neyber is able to offer amazing rates on the loans, much better than the average payday loans company. Repayments are automatically taken and although more complicated, Neyber is still a better option financially for employees and employers than other loan alternatives.
Are There Any Issues with Using Salary Advance Companies?
Although Salary Advance Companies are becoming increasingly used and popular there are still some issues that some employees may run into when using Salary Advance features.
For example, all Salary Advance companies will allow your employer to see how you have used it and track your in and out-goings while using the app. Some employees may not appreciate that their finance can be viewed without their discretion.
Moreover, employees cannot use Salary Advance companies if their own company has not signed up to it. Many companies still have not begun using Salary Advances and therefore employees are not able to access their salary early. If you are an employee and would like this at your company, speak to your HR and see if it is viable!
Will Using my Salary Advance Effect My Credit?
No! The great thing about Salary Advances is that there is no interest and taking money from your salary has no affect on your credit score. You can take money out at any time, in line with the regulations of the Salary Advance company, and use it for whatever you want!
However, using Salary Advances will not help if you have other debt and Salary Advances should be used sensibly and responsibly.