Wash Cycle: Cash Advances for Staff – A Winning HR Policy
When a staff member experiences a financial crisis, how many linen, uniform and facility services companies would agree to advance that employee cash against their own paycheck to help out in a time of need?
We’d guess it’s not uncommon, particularly among independent companies. What’s unusual in the case of Wash Cycle Laundry in Lynn, MA, is that they’ve established a formal system of paying cash advances to employees in need – with guidelines for ensuring compliance with program rules. Wash Cycle founder/CEO Gabriel Mandujano described the program in a recent LinkedIn post (click https://bit.ly/AdvancePayer). Identifying himself as a “Social Entrepreneur and Growth Company Executive,” Mandujano outlined how Wash Cycle makes zero-interest cash advances available to its employees, who pay off the loans in $50 weekly increments. Mandujano summarized the preliminary results of the program in his post. To date, the company has issued 87 cash advances to staff. The company OK’d 97% of the applications it received. The average advance is just over $1,000. “We don’t ask questions about ‘why’ unless people request more than a week’s pay (which we approve in specific circumstances), he says. Mandujano added that five of these advances helped employees avoid eviction. Another helped an employee avoid jail time.
Two of Wash Cycle’s employee advances went into “default,” i.e., they weren’t paid back in full, although 50% of the funds were paid off. This leaves the program with a “1% default rate,” Mandujano wrote. He acknowledged that for one of the defaulted loans, Wash Cycle bent its own rules to OK the request. “We went outside our policy to issue one, which is a good lesson—follow your policies!”
The biggest downside to the program is the time needed for oversight. “It’s a bit burdensome to administer the program, he writes, “But in terms of cash cost to the company vs. perceived employee benefit, I think this is the highest-impact benefit we offer by far.” In all, the cash-advance program has cost the company $92,511 for a total of 89 cash-advance applications from employees. Out of this total, 34 ($47,890) are in repayment. A total of 51 cash advances ($41,021) are fully repaid, and two – totaling $1,100 – are in default. Two more, totaling $2,500, were rejected. While it’s difficult to gauge the precise impact that an effort like this can have on staff morale and recruitment/retention, Mandujano is convinced it’s a winning policy.
Click here to access a feature article on Wash Cycle Laundry that appears in July’s Textile Services magazine. For more information on Textile Services, or to subscribe, click here.