In recent months, a new trend in the payroll world has been gaining momentum, the so-called Salary on-demand or On-Demand Salary.
As an introduction we can say that the on-demand salary is to receive an advance of the payroll on the days already worked and it is being introduced in Mexico.
It can be used to get out of a financial emergency or an unforeseen economic situation.
To get into the subject, Salary on-demand is a financial liquidity scheme.
Its model consists of alliances between fintechs (or financial companies) and companies so that workers can access their salary instantly through the financial institution's app.
Since it is money from the worker's salary, it belongs to the worker, so it is not a credit on which interest is paid, since it is a salary advance.
On the day of payment, the amount of money advanced is delivered to the fintech and the remaining amount to the payroll account of the people who received the advanced salary, in addition to the payment of a commission, which may vary depending on the financial institution.
How to use Salary on-demand?
One way to use the payroll advance wisely is to identify the type of expense for which the money is required and not request more than necessary.
It is recommended to request only up to 40% of the salary you are going to receive. Otherwise we could have problems due to accumulation of debts at the end.
Another recommendation is that when requesting a payroll advance to get out of an emergency, you should make an evaluation of your financial health.
This is because the lack of money before the end of the month or fortnight is an indicator of poor financial management.
Are you overspending on non-essentials? Are you spending more than you receive in payroll?
Knowing this can help us get an idea of what kind of alternatives are available to improve our financial health.
It is important to emphasize that the on-demand salary can only be requested by employees of companies that have made alliances with these financial institutions, so we recommend that you ask the human resources department if they have this benefit.
Another important point is that there is a charge for the provision of money by the institutions that grant this option.
Although it is not an interest charge as if it were a loan, the companies charge a fee for the service, which must be paid each time the payroll advance is requested.
What do you think about this topic and do you think it is a good option to get out of an emergency?
Tell us in the comments
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