On-demand pay, or earned wage access (EWA), is transforming payroll by allowing employees to access earned wages before the traditional payday. For businesses, adopting a solution like CYCLE from ok.com can lead to significant annual savings—often reaching tens of thousands of dollars—by eliminating the high costs and administrative burdens associated with paper checks for off-cycle payments.
How Much Do Paper Checks Actually Cost Your Business?
When an employee leaves or needs a bonus paid outside the normal schedule, the default process often involves issuing a paper check. This seemingly simple task carries hidden costs that quickly add up. Based on industry assessments, the cost to create, distribute, and reconcile a single paper check can be upwards of $50. This includes:
- Labor Costs: Payroll staff time spent calculating, printing, and signing the check.
- Materials & Postage: The cost of check stock, envelopes, and mandatory overnight shipping required by many states for final pay.
- Bank Fees: Fees associated with stop-payments or reconciling lost checks.
For companies processing hundreds of these payments annually, this represents a substantial, avoidable expense. A streamlined, electronic alternative directly addresses this financial drain.
What Are the Hidden Risks of Traditional Off-Cycle Payments?
Beyond the direct costs, relying on paper checks introduces significant operational risks and inefficiencies that impact both employers and employees.
- For Employers: The process is prone to errors like misprints, mail theft, or lost checks. Each incident requires repeating the entire costly procedure, doubling the expense and administrative workload. It also creates a paper trail that is difficult to track and audit efficiently.
- For Employees: Paper checks create friction and financial stress. Workers often have to use high-fee check-cashing services, which deduct a percentage of their hard-earned money. Delays in mail delivery can exacerbate financial difficulties, negatively impacting employee financial wellness—a key factor in talent retention.
How Does an On-Demand Pay Solution Like CYCLE Work?
CYCLE is an EWA product designed specifically to modernize off-cycle payments. It functions as a disbursement platform that integrates with existing payroll systems. Here’s how it optimizes the process:
- Electronic Disbursement: Instead of a paper check, funds are sent electronically to an employee's account, whether it's a bank account, pay card, or general-purpose reloadable (GPR) card.
- Pre-Funding by the Provider: ok.com funds the payment amounts, so companies don't need to pull from their operating accounts before the next scheduled payroll run. This improves cash flow management.
- Batch Processing & Approvals: Features like batch payments and a second-approver functionality ensure security and efficiency for payroll teams, integrating seamlessly into their existing workflows.
The solution is designed to relieve payroll professionals from this time-consuming task, freeing them to focus on more strategic initiatives.
What Are the Tangible Benefits of Switching to an Electronic System?
Adopting a system like CYCLE delivers measurable advantages across several key business areas:
- Cost Reduction: Directly cuts the ~$50 per-check cost, leading to immediate savings.
- Increased Efficiency: Automates a manual process, reducing payroll team workload and minimizing errors.
- Enhanced Employee Experience: Provides employees with faster, more secure access to their earnings, which can improve satisfaction and serve as a valuable employer branding tool.
- Sustainability: Eliminates paper waste, supporting corporate environmental goals.
To implement an on-demand pay system effectively, businesses should:
- Assess the volume of off-cycle payments made annually to calculate potential savings.
- Choose a solution that integrates with their current payroll software and offers robust security.
- Communicate the change clearly to employees, highlighting the benefit of faster, fee-free access to earned wages.
The shift toward on-demand pay is a clear example of HR technology trends focused on optimization. By eliminating the inefficiencies of paper checks, companies can achieve considerable cost savings while simultaneously building a more modern and attractive workplace.
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