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Something that surprised me when I first started hiring employees was how hard it was for people to manage their cash flow, especially at the more limited level

by aresant 12y ago

Something that surprised me when I first started hiring employees was how hard it was for people to manage their cash flow, especially at the more limited levels. We started with a once-a-month paycheck, which my co-founder and I were used to and saved some payroll fees. This subsequently blew up in our face within a few months as people would spend heavy @ the front end of the month, wouldn't save for things like car repairs / gas / etc, and were out at the end of the month funding living with CCs. So I applaud this effort for a start-up - I'm excited to see where they take it.

Swizec 12y ago
As somebody who varies between managing cashflow well and not-that-well ... it all depends on how much you make and the steadiness of your income. For instance, last year I had a string of events where clients were a few months late in paying me. This created a snowball effect that took over a year to fully get rid of. During this time I was always running out of money by the end of the month, and it was always a race of whether my credit card payment[1] would get triggered before the wire transfer for my payment arrived. Now I have enough saved up for just two months of living. Suddenly cashflow management isn't a problem at all. If something happens, it happens, I can buffer it all out and money just isn't as big a problem. At least not for the big stuff. It's a bit like clothes. I can manage my laundry perfectly fine. But if for some reason I don't do laundry on Saturday, I will be out of clean clothes by Tuesday. [1] it's set up so it gets blocked if I don't pay it off in full every month
- peteretep 12y ago
  "Rich" people have a real advantage here. For historic reasons, I have an overdraft facility on one of my checking accounts of $15,000. This means I can time dividend payments from my company optimally for tax, large investments, and so on, without worrying too much about personal liquidity, which saves and makes me money. The interest isn't free, but we're talking "daily latte" sort of expenditure.
sukilot 12y ago
Monthly payroll is illegal in California, for this reason. Credit cards half one-month grace period, so living on credit cards wouldn't actually be a problem though. Spending more than income would be a problem.
- pzxc 12y ago
  Every one of the 200,000 public employees working for the State of California gets paid once a month, on the 1st.
- cornellwright 12y ago
  IANAL, but monthly payroll is legal in California for salaried exempt employees. For non-exempt it has to be at least bi-monthly.
- peteretep 12y ago
  > Monthly payroll is illegal in California, for this reason Monthly payroll is the usual in the UK. If you switched to weekly, most people wouldn't save enough to make their rent each month, where the trick on monthly income is to just front-load all the big expenses to just after you've been paid.
cperciva 12y ago
once-a-month paycheck I was surprised to learn recently that this isn't legal in BC: Employees here must be paid at least twice a month, with at most 16 days between paychecks. It always seemed a bit silly to me, but what you describe explains why it's necessary I suppose.
patmcc 12y ago
>>We started with a once-a-month paycheck, which my co-founder and I were used to and saved some payroll fees. Just a reminder to any other founders - some jurisdictions may dictate how often you must pay your employees, make sure to check your local laws. My province requires payment at least twice a month. I'm not suggesting aresant was violating any laws here, but once you start to pay people you need to be up on your employment law - there can be serious consequences.

by aresant 12y ago

Swizec 12y ago

As somebody who varies between managing cashflow well and not-that-well ... it all depends on how much you make and the steadiness of your income. For instance, last year I had a string of events where clients were a few months late in paying me. This created a snowball effect that took over a year to fully get rid of. During this time I was always running out of money by the end of the month, and it was always a race of whether my credit card payment[1] would get triggered before the wire transfer for my payment arrived. Now I have enough saved up for just two months of living. Suddenly cashflow management isn't a problem at all. If something happens, it happens, I can buffer it all out and money just isn't as big a problem. At least not for the big stuff. It's a bit like clothes. I can manage my laundry perfectly fine. But if for some reason I don't do laundry on Saturday, I will be out of clean clothes by Tuesday. [1] it's set up so it gets blocked if I don't pay it off in full every month

peteretep 12y ago
"Rich" people have a real advantage here. For historic reasons, I have an overdraft facility on one of my checking accounts of $15,000. This means I can time dividend payments from my company optimally for tax, large investments, and so on, without worrying too much about personal liquidity, which saves and makes me money. The interest isn't free, but we're talking "daily latte" sort of expenditure.

sukilot 12y ago

Monthly payroll is illegal in California, for this reason. Credit cards half one-month grace period, so living on credit cards wouldn't actually be a problem though. Spending more than income would be a problem.

pzxc 12y ago
Every one of the 200,000 public employees working for the State of California gets paid once a month, on the 1st.
cornellwright 12y ago
IANAL, but monthly payroll is legal in California for salaried exempt employees. For non-exempt it has to be at least bi-monthly.
peteretep 12y ago
> Monthly payroll is illegal in California, for this reason Monthly payroll is the usual in the UK. If you switched to weekly, most people wouldn't save enough to make their rent each month, where the trick on monthly income is to just front-load all the big expenses to just after you've been paid.

cperciva 12y ago

once-a-month paycheck I was surprised to learn recently that this isn't legal in BC: Employees here must be paid at least twice a month, with at most 16 days between paychecks. It always seemed a bit silly to me, but what you describe explains why it's necessary I suppose.

patmcc 12y ago

>>We started with a once-a-month paycheck, which my co-founder and I were used to and saved some payroll fees. Just a reminder to any other founders - some jurisdictions may dictate how often you must pay your employees, make sure to check your local laws. My province requires payment at least twice a month. I'm not suggesting aresant was violating any laws here, but once you start to pay people you need to be up on your employment law - there can be serious consequences.