Flexible salary as part of the employee’s experience

Employee experience is defined as satisfaction with benefits provided by the workplace, outside pay and basic benefits such as annual leave, financial bonuses, etc.

During the workshop organized by SmartHR, Flipful shared its knowledge, experience and solution on how to increase employee engagement in the company and reduce staff rotation.

What are the findings on the financial literacy of Latvian society?

This year’s crisis has shown how people are not prepared for unplanned spending and financial challenges. This is evidenced by at least the most searchable questions from Google related to financial help.

The FCMC study on financial literacy in Latvia in 2019 revealed rather sad results, especially the tendencies show that more work needs to be done in educating young people on financial planning and savings issues.

The data also show that despite the newly introduced restrictions on quick loans, their amount has decreased by only 10% and in 2019, 585 thousand loans were issued for an average amount of 404 euros.

Finally, in the European Financial Welfare Barometer, which compares 24 countries in terms of their citizens’ ability to pay their bills on time, independence from loans, savings for the future and financial literacy, Latvia ranks 21st with a financial literacy score of 20.6 out of 99, which can be compared to a barely successful student.

So what is financial well-being and how does it affect the employee?

Financial well-being is security for tomorrow and confidence in your finances. Paying bills with no worries, and have something left over. Financial well-being is when you have unplanned spending, there is no need to think about how to pay for it or where to borrow money.

Research shows that financial instability and stress suppress not only a person’s well-being, but also productivity (52%), as well as promote employee turnover (30%) and absence during working hours (47%), according to employers.

How to promote employee well-being in the workplace and how can flexible salaty payment help the issue?

By taking care of employees, companies have introduced various benefits that help to create a positive atmosphere in the workplace and increase productivity in general. Some of them are:

– Health Insurance

– Contributions to the 3rd pillar pensions

– Paid educational and team building activities

Employers have also included elements such as financial management and budgeting tools, financial health indicators and pension calculators in their wellness programs.

One of the financial tools that helps to establish a healthy relationship with your finances is the flexible salary payment offered by Flipul. Why does it contribute to financial well-being?

First of all, it is an opportunity to receive the earned salary at any time when it is needed. For an employee, this can be an unplanned payment, for example, for car repairs or a visit to a doctor. And the opportunity not to borrow from third parties, but to use your own funds, will help to avoid the “trap” of quick loans, as well as to manage your finances even more carefully in the future and consider the possibility of making savings.

Second, the trust factor from the company when giving control of employee finances to the themselfs. It also stimulates employees to think about savings and responsibility, as mentioned above.

Thirdly, unlike an advance, the money is credited to the salary account instantly, which is useful if the funds are really needed here and now. There is no need to coordinate the advance and go all the way from the manager to the accountant.

And finally, this method also helps to take care of employees’ emotional state. Not everyone can say openly that they have financial problems and ask for an advance to solve them, as there may also be unnecessary questions about the purpose of using the advance, but with the Flipful application, the employee can be sure that such an awkward situation will be inevitable and can deal with the situation faster and efficiently on their own.

What does the customer gain and what are the risks of using the Flipful service?

Flipful is an easy way to make every day a payday. It allows you to choose when to receive your earned salary, reducing stress and making you stop asking yourself – when will it be already?

The questions asked by customers (companies) are nothing new, especially if they are about to start something unprecedented. Potential customer frequently asked questions: does this mean that additional information about employees will be needed? What is the difference with an advance payment? Will the employee be able to withdraw more than he earned? How could this work in the current solutions?

As with any business, the Flipful user might meet both benefits and risks. The end user (employee) gets the opportunity to be protected from unforeseen expenses at any place and time. It could be an analogy of using an umbrella that can be activated when needed. This option reduces stress, as the user will no longer have to worry so much about their financial situation. Financial well-being is also improving – research shows that, if a person can handle money more flexibly and receive it more often, then he or she can build up savings more effectively.

A risk that is important to mention (which happens in some cases) is insufficient financial prudence, which can lead to the situation, when all available limits are spent and there is not enough for mandatory bills. To avoid this and other risk situations, Flipful has incorporated financial literacy training in the employees’ mobile app, as well as company-defined amount and withdrawal limits, so that money is spent only for real needs.

The benefit of the company is the opportunity to improve productivity, because employees focus on work, they don’t have to think about finances at that moment.

As well as a very important aspect – loyalty – employees will not be deceived by a salary supplement, if they have the opportunity to handle their salary flexibly. This in turn reduces staff turnover costs and time spent selecting candidates.

And, of course, one of the most important points when choosing a job is the environment in the company and involvement. Feeling that the employee is taken care of, they value their employer, thus also increasing the employer’s own reputation not only in the eyes of existing but also potential new employees.

But considering the risks, if the service is not properly communicated in the company, and the employee feels that it is not money earned, but that he borrows from the employer, then the employee may not understand why part of the salary will be deducted at the end of the month, thus creating a bad impression of the employer.

If this service is introduced for a fee to your employees, they would have to pay for the request and for the withdraw, but if it is not successfully communicated, the employee may be unhappy that he or she has to pay for it. Therefore, it is very important to talk to the employees themselves, as well as the communication must be as transparent as possible, so that if you pay, you know what for. Sounds simple, modern and even exciting, doesn’t it?

What does it take to get started?

Stage 1 – we identify existing processes – how salaries are currently paid, on what date, where they are listed, etc.

Step 2 – we prepare a proposal – how we can provide our service to this company with minimal changes, what will be our role. Preparing a plan on how it will all work.

Step 3 – the implementation phase – when we actually send employees information on where the application can be downloaded and what needs to be done. The company signs a contract and, accordingly, the company’s employees have instructions on further processes.

When finance management is a passion. Interview with Flipful founder – Janis Putnins

Guided by the needs of today’s customers and combined with a vision of financial well-being in society, a new product was created – Flipful. It offers users to protect themselves from the consequences of unplanned expenses. In the interview, the founder of Flipful, Janis Putnins, talks how he came up with idea of creating a new financial tool Flipful, tells us about the service itself and its advantages.

Janis, you are the founder of the fintech start-up Flipful. What role does finances play in your life?

Today due to Covid-19 circumstances, more than ever, people have felt the importance of savings. The unexpected situation in the country also contributed to unplanned expenses. Many have lost their jobs. But what if we devoted more time to arrange our finances?

Finances are an essential part of everyday life that needs to be organized. Arranged financial issues make you feel confident about your future, so to speak, you create an “airbag” for unexpected changes in life or sudden unplanned expenses. I don’t think everyone should be a professional accountant, but basic knowledge will be useful for all. Financial literacy not only improves the financial situation, but also raises the quality of life in general and reduces the level of daily stress.

I have been managing my finances since I was 16 years old. From personal experience, I know what it means to live “from salary to salary”. I have both – studied and worked in the financial sector for many years, including going through a period of financial crisis. Therefore, I have experienced better and less good times, as well as successful and less successful examples.

Tell us more about your work experience in the financial sector!

My work experience in the banking sector has been observed since I was 19 years old. Initially, in Swedbank I worked as a customer service specialist for individuals, providing advice to businesses on banking services and opportunities. Later, as a project manager, I developed a solution for companies in terms of cash flow – how to plan the flow of incoming and outgoing payments and select the right tools for business support

My experience at Luminor (ex DNB) was more related to digital banking solutions, such as the introduction and launch of mobile banking. In this area, it was very important to understand the customer experience. In general, with more than 10 years of experience in the banking sector, I had worked on various aspects of financial management and projects, which also helped to develop a comprehensive understanding of customer needs.

Name 3 main reasons why you created Flipful!

First of all, people need a solution that allows them not to borrow money from third parties and so deal with unplanned expenses on their own. Flipful provides people with an ethical alternative to get their earned salary when needed for unplanned expenses. And in a situation where you need to see a doctor urgently, you no longer have to take a fast consumer loan.

Second, of course, it cannot completely change the culture of consumption (it will not solve all the problems), but based on many researches (for example, Wendy De La Rosa with 3 psychological tricks to help you save money), it gives a feeling of inner peace (decreases emotional tension), and also helps to improve the financial situation in the long term.

Third, I am fascinated by the product development process that has a positive impact on people. If I can come up with a solution that people need and would like to use – I think that’s a very important reason to choose to do so.

What are Flipful development plans? What improvements are you working on?

People now have the opportunity to withdraw their salary when needed. The next task for us will be to introduce the possibility of diverting part of their salary to savings automatically to create an ‘airbag’ so that people can freely make and organize their savings. In the future, we also plan to provide personalized advices that would increase people’s knowledge of how to organize their budget, start savings, and manage their finances. We have now created a basis for financial literacy education, but as we continue to work on this project, we plan to combine the available services with information from the user’s bank. Such a solution will allow a person to receive very specific and personal recommendations.