Using Loans to Bridge the Payroll Gap

Managing to pay the employees is one of the most important parts of working in business. However, it’s also one of the most sensitive parts. This issue has been happening even before the recession in the US. Bridging the payroll gap is also experienced in the South East Asia, including Singapore.

Most businesses have enough employees that they struggle when it comes to making the payments on a regular basis. Payroll makes up a huge expense, especially in the service industry. When it comes to business ethics, taking out a loan to meet payroll requirements is often to be the most ethical response. Anyone who works in the service and construction industry in Singapore can attest to that. That’s why for a quick solution, companies seek for the best Singapore foreigner loan deal that they could find. But is it enough?

Lots of business owners in the south east Asia are reluctant to take this step. Regardless of the ethical implications, many of them would rather defer the pay of their employees during a setback rather than take a loan. But, this will lead to worse consequences in a lot of cases. Employees are will often quit if this is the case. In a struggling economy, it is true that some employees can manage to stay just in the hopes that they get paid in the future. But, employers should not count on this.

Deferring paychecks is unwise and questionable. Losing a lot of employees during a job crisis is more of a massive problem from a financial perspective. On that basis alone, it is not a good idea to defer payments of your workers. Not to mention, it is also a violation of ethics. Employees depend on their paychecks. They put in a lot of effort to make sure that a company is running. It will be difficult for any company to justify the delay of payment from an ethical perspective.

Some employers will defend the deferment of paychecks. Some companies will argue the functional aspects of it. They might argue that if the company goes under, the employees will lose even more money. However, they don’t know what will happen in the future. For all they know, they will have to keep pushing back the moment at which their employees get paid.

Another alternative that some employers will resort to is to make a massive salary reduction. This solution may seem better than delaying payroll, but it will have a detrimental effect. The employee productivity and morale might suffer. After all, good employees can find work elsewhere. They don’t have to stay for a miserable paycheck when they can move on to another better paying job.

Companies are better off trying to solve financial problems with loans. A loan might not be ideal for the development of business, but it can still be a minor setback. Getting payments deferred will not lead to personal growth for employees. It’s just going to make a lot of other surrounding circumstances worse. Deferred payment will result in an inadequate job performance of employees in almost all cases. Companies are going to end up struggling even more than they would.

If a business can’t make the loan payments, then it is even more important that they find other solution to their problem. Diverting employee payments will cause more trouble in the end. Not paying the payroll and getting a loan are both temporary solutions to address temporary financial problems. In this regard, they are even and interchangeable. But, one of them is ethical, and one of them is not.

In this kind of issue, taking out a loan is the decent alternative to diverting employee payments.