Employee Procurement Plans: Giving Employees Power

Employee purchasing plans are a major 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 do not have the necessary cash flow to buy these appliances directly and have to fund them through a credit card.

Obviously, buying through a credit card can have some detrimental financial impact on the employee (high interest rates (and payments), increased debt if not paid in full each month, lower credit rating, etc.)) if not properly managed. Many employees only have the credit card option to fund their purchases.

A good solution for the employee and the employer is: employee purchasing plans

What are these type of benefit plans?

Employee Purchase Plans (EPP) are voluntary employee benefits that allow the employee to make purchases through monthly payroll deductions rather than through a credit card.

Here’s how they work:

The employer collaborates with a distribution company to create an EPP for their employees (note: to create this, the company must have more than 250 employees). There is no cost for the company to create EPP. AND, more importantly for the company, no financial or trust risk. During the initial introductory phase, employees who purchase goods receive a discount.

Once the plan is in place, employees can purchase items (name branding equipment delivered to their doorstep – all done online) through a company-related site and have them draw payrolls monthly for a year. Prices can be compared to stores except for a small fee built into the risk of default (much, much less than credit card interest paid by the employee for the item before paying himself). In addition, if the employee leaves, the employer has no responsibility for the purchase and the EPP back-end processing company has no option for the company. It is the employee’s purchase and their responsibility to pay, regardless of whether the employee leaves mid-year with any remaining payments.

Employees’ purchase plans can be a true win-win for employers and their employees. The employer can significantly improve their benefits package (at no cost, no financial or trust responsibility and with limited effort), and its employees may have the flexibility to purchase larger household appliances and electronics through automatic payroll deductions. It may be a good idea to see if an employee sourcing plan is right for you and your business.