How On-Demand Pay Reduces Agency Spend for Care Providers
Care providers walk a financial tightrope, juggling high-quality patient care with the soaring expenses of recruitment, training, and staffing. Among these costs, one of the largest and most unpredictable is agency spend. Many care providers rely heavily on staffing agencies to fill workforce gaps, a model that can come with steep premiums and financial strain.
Here’s where On-Demand Pay presents an innovative, cost-saving solution. By empowering employees with flexible payroll options, care providers can improve staff retention, reduce agency dependency, and ultimately lower operational costs.
What is On-Demand Pay?
On-Demand Pay, often referred to as Earned Wage Access (EWA), allows employees to access their earned wages instantly, rather than waiting for the traditional end-of-month payday. Through this model, care workers can take full control of their finances, withdrawing a portion of their earnings as soon as they’ve completed shifts.
For employers, implementing On-Demand Pay services is seamless with modern platforms and apps that integrate with existing payroll systems. This approach doesn’t alter payroll cycles; rather, it offers employees instant access while employers fund advances through the payroll provider.
The cost of agency reliance in the care sector
Agency spend in the care sector consumes a significant portion of operational budgets. The UK care industry alone spends billions every year on agency fees, driven by chronic staff shortages and rising demand for quality care.
Why agency costs are so high
Premium shifts
Agencies charge a premium to cover their staffing costs, administrative expenses, and profit margins. This can lead to care providers paying twice (or even three times) the hourly wage they’d pay directly employed staff.
Short notice
Cover for unexpected absences often comes at a steep price. Agencies take advantage of ‘last-minute’ cover rates, leaving providers with limited room for negotiation.
High turnover
An over-reliance on agency staff often exacerbates turnover among permanent employees who feel undervalued or overworked. This perpetuates the cycle of over-spending to fill staffing gaps.
Reducing agency reliance not only saves money but also creates more consistent, high-quality care environments. This is where on-demand pay can make a lasting difference.
How On-Demand Pay helps reduce agency spend
Implementing On-Demand Pay goes beyond employee satisfaction; it addresses the root causes of agency over-reliance and strengthens workforce retention, stability, and morale.
Creates financial stability for employees
Care work, while rewarding in many respects, is often low-paid, leaving workers vulnerable to financial insecurity. A monthly payday can make it difficult for staff to meet urgent expenses, contributing to stress and workforce attrition. Here's how On-Demand Pay helps:
Access to earnings anytime: Employees can withdraw funds immediately after completing shifts, bridging financial gaps and reducing reliance on high-cost credit.
Improved wellbeing: Financial stress is a leading cause of employee turnover. On-Demand Pay helps alleviate these pressures, allowing staff to focus on their work.
When employees feel their employer is genuinely supporting their interests, they’re far more likely to stay in their roles rather than seeking alternative work or agency flexibility.
Makes shifts more appealing
Many workers turn to agencies for the flexibility they offer, often feeling that permanent employment doesn’t meet their work-life balance needs. However, On-Demand Pay creates flexibility without additional costs, as employees can:
Manage cash flow flexibly: Imagine finishing a last-minute night shift and being able to access your earned pay straight away. This feature provides financial freedom, without agencies acting as intermediaries.
Stay incentivised: Employers offering On-Demand Pay demonstrate a modern, employee-first approach. This can motivate existing employees to pick up additional shifts, reducing the need to look externally and pay agency premiums.
Boosts recruitment and retention
High levels of recruitment and onboarding are major drains on care provider budgets. The average cost of rehiring care workers can run into the thousands due to advertising, training, and lost productivity during role vacancies. By introducing On-Demand Pay, you make roles more attractive to job seekers while offering meaningful support to existing teams:
Attract top talent: On-Demand Pay is becoming a powerful recruitment tool. Job seekers are increasingly drawn to companies offering financial flexibility and modern benefits.
Improve retention: Feeling valued - both financially and emotionally - discourages care workers from leaving their roles. Lower turnover reduces the need for agencies to fill permanent staff gaps.
Cuts admin and payroll complexities
While agency costs dominate care expenditure, few consider the hidden losses tied to administrative inefficiencies. Managing complex payroll systems and traditional pay cycles can stretch HR teams unnecessarily. On-Demand Pay solutions streamline these challenges by:
Simplifying payroll: Integrated platforms reduce admin overheads, offering real-time wage tracking and automated systems.
Quicker and easier: Accurate earnings visibility minimises payroll queries, leading to quicker resolutions and fewer delays in payouts.
Streamlined payroll systems also free up resources within HR teams, enabling focus on areas like recruitment and engagement.
Transform your care organisation today
On-Demand Pay holds the power to revolutionise financial strategies in the care sector. Beyond reducing agency spend, it strengthens employee loyalty, boosts morale, and fosters a more consistent environment for delivering excellent care.
By adopting a modern payroll approach, your organisation can stay ahead in an increasingly competitive landscape while providing meaningful support for the people who deliver essential services every day. Not only does this benefit your bottom line, but it also reclaims financial resources that can go directly into improving the quality of care.
If you're ready to empower your employees and reduce wasteful spending, explore how implementing On-Demand Pay solutions could work for you today.