Gone are the days of trading livestock for two bags of grain and a bushel of apples, then carrying the whole load home on foot. Imagine how happy our ancestors would have been if they’d had the apps and technology for near-effortless payments and transfers we use today. A quick push of a button and wham! There’s your sheep, suddenly hanging out in the pasture, or your goods, instantly delivered to the pantry.
Of course, today’s tech doesn’t work quite that well. While some apps transfer money instantaneously, others require a couple of days to process. Others take convenience to the next level, offering customers the chance to schedule payments ahead of time.
In 2017, ACI Worldwide published survey results taken from 2,500 consumers across the U.S. The survey found 32 percent of respondents used a program like automatic bill pay to set up recurring payments. From that, we can infer nearly 1 in 3 individuals expects to see cash in their account at the same time each month — enough to cover whatever expenses are being taken out automatically.
Recently, QuickBooks Payroll hosted their own survey, asking participants about their payroll experiences.* What they found could be bad news for those looking to schedule their sheep-for-wheat transfers in advance.
Late paydays are baaaaaad news
One in 5 QuickBooks survey respondents said their paycheck isn’t always paid on time. That’s bad news on multiple levels. Without a paycheck, many folks can’t pay their bills. Getting paid late also impacts a person’s ability to set up otherwise-reliable transfers.
When there’s not enough money in the bank, due to inconsistent paydays, pre-set withdrawals could lead to costly overdrafts. And that’s just automatic transfers. If you’re not someone who checks your balance every payday, you might not realize the check hasn’t cleared until it’s too late. The result could be one overdraft after another, dinging your credit and piling on fees.
No wonder 18 percent of respondents also said just a single late paycheck would make them quit their job.
Employees aren’t the only ones losing sleep
When it comes to making late payments, employees aren’t the only ones struggling. Chances are if a business owner is cutting checks behind schedule, there’s a reason.
According to survey results, employees of smaller businesses (with 20 employees or fewer) are more likely to receive paychecks late. Just 68 percent of these said they receive their paychecks “always on time.” That’s compared to employees of larger companies (with more than 20 employees), among which 82 percent reported always receiving their paycheck on schedule.
Similarly, TSheets ran an article about the construction industry cash crunch. Construction companies are among those known for paying their workers late, though it’s not always the fault of the business owner. Often, it comes down to receiving late payments from clients. For construction companies, there’s a hierarchy for who gets paid first, and employees are pretty far down on the list (download the complete report here).
To counteract this problem, for better or for worse, many construction company owners (38 percent) have taken out short-term loans, just to cover payroll. This rob-Peter-to-pay-Paul approach goes on to affect the likelihood of company growth and even a construction company’s ability to take on future projects.
On-time payroll means greener pastures for everyone
Payday should be one event employees can always count on. It’s one of those things that affects every part of a person’s life, from their ability to pay bills on time to having enough money in the bank to purchase a child’s birthday cake. The reality is many Americans are still living paycheck to paycheck, and one late payday could be the tipping point between getting by and getting left behind.
But sending out paychecks on a schedule isn’t just better for employees. Having the funds to pay workers on time is good for business owners as well. If late paydays lead to employee turnover, and perhaps even rumors of imminent bankruptcy, it pays to pay on time, every time.
*Methodology: In 2018, QuickBooks Payroll commissioned Pollfish to survey 1,000 employees (age 18+) from businesses throughout the US about their payday experiences.