They had been resonating for months with a new business model within the fintech vertical – that big disaster drawer in which everything that has to do with finance falls. A few days ago, they were once again in the forefront for a round of financing. 8 million euros from a large group of investors –Seaya Ventures, Cathay Innovation, YCombinator, Pablo Fernández and Félix Ruiz– who put their eyes and attention on a model as old as life, as much as payroll or salaries themselves, but which had not transcended in Spain. Until now.
Because PayFlow’s business model is simple in the first instance. The startup, recently well financed for its international expansion and national consolidation, offers its service to companies. These include the offer in the list of employment benefits of their employees. They will choose if they want to use the benefits of PayFlow, which are none other than being able to access their payroll or salary whenever they want and from their mobile.
In other words, through PayFlow an employee will be able to decide whether to be paid at the end of the month as stipulated in management models of almost all companies or do it at the time you want. At zero cost for the employee, from PayFlow they point out that it is a way to give the employee back the power of their work. “Something fairer.”
Salary, when do I want?
Yes and no. Because PayFlow sets the paths, but not the rules. These, in the end, are at the mercy of the company that hires the services for its employees.
There is only one rule by the company founded by avinash sukhwani and Benoît Menard. The employee will only be able to access the salary that he has generated until the moment he requests it. That is to say, there will be no previews of what is supposed to come the rest of the month. If the withdrawal is made on the 10th, it can only take the percentage of those first days of the month. Of course, without forcing anyone:
“We want to put an application in their pocket that allows them to charge whenever they want, but we don’t want to force anything or anyone.”
And while it is true that from PayFlow they point to what they want avoid a paternalistic position regarding salary, the control panel that they make available to companies gives them the benefit of the doubt. One of the options used by some of the 175 companies that use the PayFlow software allows them to block part of the payroll. Leaving 50% available to the employee, the rest will continue at the end of the month. Why? The companies they prefer to secure a percentage of the payroll for payments that normally come every month: mortgages, rents, receipts, cards…
The rest is history. The payroll document will remain the same as always, the payment of it depends on the employee himself. In the eyes of the Administration nothing changes, in the hands of the worker everything depends on him. In the case of the company, 1 euro less per employee on the payroll, the price of the service. One that is about to change upwards: “Now that we have dozens of recorded success stories, we feel comfortable raising that price in the coming months,” he says. sukhwani to hypertextual.
Outside of Rocket Internet, but following in its wake
PayFlow is a worthy heir to the careers of its founders. avinash sukhwani and Benoît Menard met during their studies at MIT, later they became part of the ranks of Rocket Internet, the creator of serial startups. The same one who founded one of the delivery successes at European level: Delivery Hero. The same one that little by little ended up taking over the Glovo business.
“They have a lot of prominence in decision-making, they approve budgets, the company is not yours because you don’t stop being a salaried employee,” he says. sukhwani. For this reason, he left the startup conglomerate to create his own. But following Rocket’s logic: look for a business model that already works elsewhere to import it to a new region. Without inventing the wheel, PayFlow rescued an old custom and a successful model in the United States.
Collecting your payroll whenever you want is not as new as you think
A payroll was, in ancient times, a relic in which the names of the saints of the moment were noted. Over time, and with a more professionalized labor market, it was the list of individuals who should collect each day’s salary, confirming their receipt with a signature. Nice metaphor that relates an employee to a saint. But anecdotes aside, there is an interesting detail: the fact of charging after a job done. In the eyes of the 21st century, not even the bulk of the self-employed, affected by the 90-day installments, can say that they charge at the moment.
With these, a large group of startups has tried to cover what was normal 100 years ago. In Europe, with the United Kingdom in the lead, and in the United States, it is an established service. In Spain they do not have more than 0.2% market penetration. With no more than four competitors in the home territory, there is a market for everyone. At least for now.
Like PayFlow, Earnin in Palo Alto, PayActiv in San Jose, SalaryFinance in the United Kingdom – active since 2015 – or the veteran Wonga born in 2007, they act as salary providers. Also Revolut in one of its business divisions. With them a long list of similar companies that bid to stay with the market of salaries at will. Especially for those who establish the social convention of payment at the end of the month, a simple decision to save time in payroll management.
The problem of financial education and payroll management
However, the idea of getting paid when you want has its pros and cons. From a financial point of view, it solves some of the problems intrinsic to business cycles. Being able to charge at any point of the month, spending and consumption peaks are smoothed out and distributed throughout the cycle. On the other hand, it requires better money management and certain notions in personal finance management.
For Javier Collado, professor at UDIMA, “everything depends on the employee.” But with a little financial knowledge, “it can help you avoid cards and credit, as long as you don’t use both because if you don’t you can get into a very big trap.” In fact, in the case of PayFlow, they point to the use of the platform in order to avoid precisely the use of cards in case you have them. And they are not going wrong. According to the company’s data, those who use these services the most tend to be the most modest salaries related to the service sector. In this, he warns, there is a double reading. Better use of cards is good, but only as a substitute for poor pay or poor management.
In the case of Vicente Varo, director of content at Finect, regardless of whether it is offered by a company or not “for the employee it is better to get paid weekly, but regularly”. It favors organization, and is fairer with the volume of work created. But like everything else, this is determined by basic financial education, one that has long been the pending subject of an entire country.