Earlier this fall, experts predicted that holiday season retail spending could increase more than 4 percent over 2013’s figures. Unfortunately, that holiday cheer can often result in a post-holiday financial hangover, as consumers face credit card debt for their purchases. An employee purchasing program can help employees buy big-ticket items this holiday season without scrimping—and without amassing unnecessary interest charges. Here’s how employers can give more buying power to employees through payroll deduction.
Employers sign up with a vendor, which offers their employees access to an online catalog of merchandise available for sale. Products can range from electronics to furniture to jewelry. Some merchants even offer purchasing programs for college courses or other educational services, such as SAT preparation classes.
When an employee buys something through the catalog, he or she can pay for it over time, with convenient payroll deduction. The vendor handles the work, including fulfillment. All the employer has to do is allow the vendor to make automatic payroll deductions.
Benefits for Employees
Employees can buy things they otherwise might not be able to afford, without resorting to charging their purchases on a credit card. And unlike layaway plans, purchasing plans let employees enjoy their purchases immediately.
Other benefits, which might vary by vendor, can include:
- Access to first-quality name-brand merchandise, with manufacturer warranties where applicable
- All costs disclosed upfront—no additional fees
- No credit checks
- Affordable installment payments
- Convenient payroll deduction
- Zero percent financing
- No overspending—the purchasing plan vendor sets a spending limit for participating employees based on their salary.
Benefits for Employers
Employers gain a benefit program that helps employees maintain a better work/life balance. The employer has no costs or administrative responsibilities — the vendor handles marketing, administration and fulfillment. The employer bears no liability for products or services, or for unpaid balances if an employee leaves the organization before his/her purchase is paid up. If that occurs, the vendor will arrange a payment program directly with the employee.
Purchasing programs usually set a spending limit for each participating employee based on the employee’s salary. This helps prevent overspending and the resulting financial stress, which can affect an employee’s productivity at work. In fact, in the 2013 PricewaterhouseCoopers Employee Financial Wellness survey, nearly a quarter of employees admitted that personal financial issues have distracted them at work. Among these employees, 19 percent said that they spent five or more hours per week at work dealing with or thinking about their personal finances.