Employee Purchasing Plans: Giving Employees PowerT. Spencer White
July 12, 2012 — 1,869 views
Employee Purchasing Plans are a great new trend in employee benefits.
Like everyone else, employees need things for their lives away from work. This includes: typical appliances (washer/dryer, dishwasher, refrigerator, etc... ), computers (laptops, desktops, etc... ), and other household items. Many times, employees won't have the necessary cash flow to purchase these appliances outright and have to finance them via a credit card.
Obviously, purchasing via a credit card can have some detrimental financial effects on the employee (high interest rates (and payments), increased debt if not paid in full every month, lower credit score, etc... ) if not managed properly. Many employees only have the credit card option to finance their purchases.
A great solution for the Employee and Employer are: Employee Purchasing Plans
What are These Type of Benefit Plans?
Employee Purchasing Plans (EPP) are Voluntary Employee Benefits that allow the employee to make purchases via monthly payroll deductions instead of via a credit card.
Here's how they work:
The Employer works with a benefits company to set up an EPP for their employees (please note: in order to set this up, the company must have greater than 250 employees). There is no cost for the company to set up the EPP. AND, more importantly to the business, no financial or fiduciary risk. Plus, during the initial introduction phase, employees purchasing items will get a discount.
Once the plan is in place, employees can purchase items (name brand appliances delivered to their doorstep - done all online) via a company-linked website and have them payroll deducted monthly for a year. The prices are comparable to the stores except for a small fee built in to the price for the risk of default (much, much smaller than credit card interest as the employee's paying for the item before paying themselves). In addition, if the employee leaves, the Employer has no liability for the purchase and the EPP back-end processing company has no recourse on the business. It's the employee's purchase and their responsibility to pay no matter if the employee leaves mid-year with payments still remaining.
Employee Purchasing Plans can be a true win-win for Employers and their Employees. The Employer can significantly improve their benefit package (at no cost, no financial or fiduciary liability, and with limited effort) and its employees can have flexibility in purchasing major household appliances and electronics via automatic payroll deductions. You might want to see if an Employee Purchasing Plan is right for you and your business.
Spencer's an expert in filling the holes of benefit, retirement, and insurance plans for business owners, individuals, and companies.