Everybody has their own financial commitments and constraints, meaning monthly salaries suit some, weekly suit others. Wouldn’t it be great if employees had control over this?
At Dublin Tech Summit earlier this year, one start-up in attendance was particularly eye-catching.
Among Airbnb-like services for dog owners and Tinder-like apps for commuters on aeroplanes, there was a company called Flexiwage that stood out from the rest.
Flexiwage, based in Waterford, has a pretty simple business plan: it provides an app that allows employees to decide when they get paid.
This tool lets people choose to get half of their monthly salary in the first week of the month, should they have a plethora of bills due before the 5th, say.
Employees who get paid weekly, or bi-weekly, can instead get paid at the end of the month, to curb the natural inclination to spend what you have access to.
From an employer perspective, this can be appealing, too, as it helps payroll become a little more automated and, in some instances, far cheaper.
Flexiwage’s offering won the overall start-up prize at Dublin Tech Summit and, in the weeks since, it has gone global.
In March, it was released into the US and UK markets. Should it take off, a small, new start-up could be the latest big thing in fintech.
“We launched in November, having worked on the idea for a year,” said Paul Ryan, co-founder of Flexiwage.
If a company pays staff weekly, the cost of the payroll is experienced every seven days; the staff, the overheads etc. “Companies essentially suffer a cost per payslip,” said Ryan, “but by switching from weekly to monthly, they are cutting down the payroll from 52 times to just 12.
“So that’s how we originally saw our market; though quickly, we realised monthly-paying companies would like to pay weekly, to attract talent. So the social side of it was developed: the app.”
Now here we are, with Flexiwage filling a gap that could be bigger than many people think.
In the US, for example, payday loans are such a problem that a country-wide report found the costs of servicing these debts was almost three times as high as normal loans.
When people are in a bind, their options can be limited.
Last year, the Consumer Financial Protection Bureau reported that payday loan debtors paid an average of $97 in overdraft and non-sufficient fund fees. The average American, over the same 18-month period, paid $34.
Meanwhile, a separate report in the UK – undertaken by Which? – found that payday loans were, in fact, a more economical option than standard overdrafts, with the latter proving even more expensive.
Staff, choose your salary stream
So, owning your own salary stream could prove appealing to workers.
Flexiwage, though still a new company, has a pretty straightforward business model whereby company costs are worked out per employee, with a €2-a-head standard fee.
“Companies run the payroll as normal, but for €2 per person, they can let their staff pick their money, per month. They won’t save money if they already pay monthly, but they do give staff responsibility.
“Companies that pay weekly, they save more than enough on the payroll to pay the subscription.”