19 June 2023
When your car needs repairs, your washing machine breaks down, or you have a forgotten bill to pay, unexpected expenses can quickly become overwhelming. One solution could come from your employer. With an advance payment or a down payment on your next salary, they can help you bridge financial gaps without any cost. But how does it actually work? And what exactly is the difference between an advance payment and a down payment on your salary? We'll explain it to you simply with a small example.
A salary advance payment refers to a voluntary advance made by the employer to the employee before the employee has earned the amount.
A down payment on salary or wage differs from an advance payment because it is a payment made based on an already earned income that has not yet been settled or paid out.
If you earn a net income of $2,000 per month and have already earned $1,000 proportionally after half of the month, a payment of $500 from your employer would be a down payment. On the other hand, a payment of $1,750 would be an advance payment since that amount has not been earned after half of the month.
In short: An advance payment acts as an interest-free loan from your employer to bridge financial gaps. A down payment, on the other hand, is an advance payment on already earned salary or wage that has not yet been settled or paid out.
An Innovative App for Financial Support in the Workplace With paygood, HR Improvement GmbH has developed a groundbreaking app that enables employers to reduce financial stress in the workplace. Employees can easily overcome financial gaps by requesting a portion of their earned salary or wage securely and discreetly through the app. The disbursed salary portion will then be automatically deducted from the next payroll. Many countries within and outside of Europe already have "Earned Wage Access (EWA)" offerings like this. Additionally, paygood provides information on financial stability and supports employees in budgeting and financial planning.
Promoting Employee Financial Stability HR Improvement GmbH is an innovative HR tech company founded by experienced HR experts in early 2023. Its goal is to help companies make their HR departments more effective and promote the financial stability of their employees. To achieve this, HR Improvement has developed paygood, the first "Earned Wage Access (EWA)" app for the German-speaking market. This novel service solution contributes to the financial well-being of all employees and generates social value. With paygood, employees have access to a portion of their earned salary or wage at any time, reducing financial and mental burdens. HR Improvement helps employees reduce financial and mental stress and increase well-being and commitment.
For more information, visit https://paygood.app or https://hr-improvement.de.
You can also find additional information on the differentiation between advance payment, down payment, and loans in this Haufe Fachlexikon article: "Vorschuss / 3 Abgrenzung zu Abschlagszahlung und Darlehen."
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