How to Calculate ROI When Deploying EWA for Your Business

The ROI of EWA is calculated as the financial benefit, converted to money, minus the total deployment cost, then divided by the total cost. The benefit may come from reduced replacement hiring, less time spent processing advances, lower absenteeism or improved recruitment; the cost includes the platform, integration, operations, communication, cost of funds and risk. A business should only recognize a benefit when it has before-and-after data and a method that proves EWA contributed to it.

General formula:

ROI (%) = (Total converted benefit − Total cost) ÷ Total cost × 100%

An EWA project with many users or many transactions does not necessarily have a high ROI. Conversely, moderate usage that significantly reduces manual processes, replacement hiring or production disruption can create better value.

> Glossary: ROI (return on investment) · EWA (access to wages already earned from days worked) · payroll · pilot (a trial deployment) · business case (the investment case) · KPI (key performance indicator) · SLA (service level agreement) · UAT (user acceptance testing) · eNPS (employee net promoter score) · Go–Adjust–Stop.

What is EWA ROI?

ROI — Return on Investment — is the ratio of the benefit gained to the resources a business has invested. For EWA, ROI answers the question:

> "After accounting for all costs, how much provable financial value does the flexible-wage program create for the business?"

ROI is different from the activation rate or the usage rate:

Usage metrics help explain how the program operates, but they do not by themselves prove financial effectiveness.

What benefit streams can EWA create?

Not every business has all of these benefit streams. Include in the business case only those benefits that align with the objective and can be measured.

1. Lower replacement-hiring cost from turnover

If EWA helps improve retention, the business can avoid part of the cost of hiring a replacement.

Retention benefit = Number of resignations avoided × Average replacement-hiring cost

Replacement-hiring cost may include:

• Recruitment advertising.

• Time of recruiters and managers.

• Health checks, uniforms, paperwork, initial training.

• Referral/recruitment-partner fees.

• Lost productivity during the period of being understaffed.

• Early-attrition rates that force re-hiring.

Do not take a "replacement cost equals X months of salary" figure from the market and apply it to every role. Calculate it from your own recruitment and operational data.

2. Less time spent processing manual advances

When the old process consists of a request form, manager approval, HR checking, accounting disbursement and payroll deduction, the internal labor cost can be significant.

Manual cost saved = Reduction in requests × Average time per request × Hourly labor cost of the departments involved

Measure the real time with a sufficiently representative sample, not just estimates.

3. Lower absenteeism or shift disruption

In theory, access to wages already earned may support certain needs — such as transport or essential expenses — that allow someone to keep coming to work. However, the impact must be measured with real data.

Absenteeism benefit = Number of missed shifts avoided × Average cost of a shift left short-staffed

The cost of a short-staffed shift may include make-up overtime, replacement staff, reduced output or SLA impact. Do not recognize the full value of output as a benefit if the business has not proven a direct relationship.

4. Improved recruitment effectiveness

If EWA is used as a recruitment benefit, the business can measure:

• The rate of candidates accepting the job.

• Time to fill a position.

• Cost to hire one person who joins.

• The rate of candidates dropping out before their start date.

• The attrition rate in the first 7/30/60/90 days.

The financial benefit may be avoided advertising/recruitment cost or the value of the days by which the understaffing period is shortened — but you must avoid double-counting with the "reduced replacement hiring" stream.

5. Fewer complaints and corrective actions

If deploying EWA leads to standardized approved attendance, transaction codes and payroll reconciliation, the business can reduce time spent on:

• Attendance errors.

• Duplicate deductions.

• Transactions with an unclear status.

• Bank inquiries.

• Answering questions about remaining salary.

Only recognize this benefit if the new process actually reduces time or the number of cases compared with the baseline.

6. Experience value and employer brand

This is an important benefit but hard to convert directly into money. It can be tracked through surveys, eNPS, benefit awareness or reasons for choosing the job; do not force every metric into money just to make the ROI look better.

The costs that must be fully counted

Direct provider costs

(For how to assess and compare providers: see the EWA provider selection checklist and How are EWA service fees calculated?.)

• Setup fee.

• Integration fee.

• Platform or subscription fee.

• Per-user/per-transaction fee.

• Payment fee.

• Support, reporting or customization fees.

Internal costs

• Time of HR, Payroll, Finance, Accounting, IT, Legal and Operations.

• Cleaning up employee and timekeeping data.

• Writing policies, terms and communication materials.

• UAT, training and support during the pilot.

• Reconciliation, exception handling and reporting.

Cost of funds

If the business or another party must set aside money before payday, account for:

• The average and peak size of the funding pool.

• The number of days the money is used before settlement.

• The cost of capital or opportunity cost under the financial policy.

• Reserves for shortfalls, refunds and exceptional transactions.

Risk costs

(For a full identification: see the risks of deploying EWA.)

• Overpayment due to attendance errors.

• Duplicate or fraudulent transactions.

• Refunds and inquiries.

• Data incidents or system outages.

• The cost of remediation, support and incident communication.

Do not put the full maximum risk into cost as if it were certain to occur. You can use expected loss = probability × severity of loss, then update it with real data after the pilot.

The full EWA ROI formula

Total benefit

Total benefit = Retention benefit + Recruitment benefit + Manual-processing savings + Absenteeism/productivity benefit + Correction savings + Other proven benefits

Total cost

Total cost = Provider fees + Integration + Internal operations + Communication/training + Cost of funds + Risk losses + Other costs

Net benefit

Net benefit = Total benefit − Total cost

ROI

ROI (%) = Net benefit ÷ Total cost × 100%

Payback period

Payback period = Initial investment cost ÷ Average monthly net benefit

Only use the payback-period formula when the average net benefit is positive and relatively stable.

A worked example for a business with 1,000 workers

Suppose a business has 1,000 workers and is evaluating EWA. All the figures below are assumptions and do not represent Nhan Kiet or a real client.

Assumed baseline data

Current cost of processing manual advances:

400 × 20/60 × 120,000 = VND 16,000,000/month.

Assumed EWA cost per month

This example temporarily excludes the cost of funds and risk losses. In a real business case, the business must add them if they apply.

Three scenarios: conservative, base and optimistic

The assumptions below only illustrate how to run a sensitivity analysis; they do not forecast that EWA will certainly produce these results.

Conservative scenario

• The turnover rate falls by 0.2 percentage points: 2 resignations avoided/month.

• 50% of the manual advance-processing cost is saved.

• No benefit is yet recognized from absenteeism/productivity.

Calculation:

• Retention: 2 × 6,000,000 = VND 12,000,000.

• Manual processing: 16,000,000 × 50% = VND 8,000,000.

• Total benefit: VND 20,000,000.

• Net benefit: 20,000,000 − 40,000,000 = VND −20,000,000.

• ROI: −20,000,000 ÷ 40,000,000 × 100% = −50%.

Base scenario

• The turnover rate falls by 0.5 percentage points: 5 resignations avoided/month.

• 75% of the manual advance-processing cost is saved.

• A verified absenteeism/shift-disruption benefit: VND 8,000,000/month.

Calculation:

• Retention: 5 × 6,000,000 = VND 30,000,000.

• Manual processing: 16,000,000 × 75% = VND 12,000,000.

• Absenteeism/disruption: VND 8,000,000.

• Total benefit: VND 50,000,000.

• Net benefit: 50,000,000 − 40,000,000 = VND 10,000,000.

• ROI: 10,000,000 ÷ 40,000,000 × 100% = 25%.

Optimistic scenario

• The turnover rate falls by 1 percentage point: 10 resignations avoided/month.

• 90% of the manual advance-processing cost is saved.

• A verified absenteeism/shift-disruption benefit: VND 20,000,000/month.

Calculation:

• Retention: 10 × 6,000,000 = VND 60,000,000.

• Manual processing: 16,000,000 × 90% = VND 14,400,000.

• Absenteeism/disruption: VND 20,000,000.

• Total benefit: VND 94,400,000.

• Net benefit: 94,400,000 − 40,000,000 = VND 54,400,000.

• ROI: 54,400,000 ÷ 40,000,000 × 100% = 136%.

Summary table

This table shows that the result depends very heavily on the degree of retention improvement and the replacement-hiring cost. These two variables must therefore be measured carefully; do not pick assumptions just to reach a positive ROI.

How do you prove EWA actually creates a benefit?

If you only compare before and after, the result can be affected by pay rises, the recruitment season, management changes, order volume, bonuses, the labor market or many other policies.

Method 1. Before-and-after comparison

Compare the same unit over a period before and after the pilot. This is easy to do but requires noting other changes happening at the same time.

Method 2. Pilot group and comparison group

Choose two relatively similar groups; one deploys EWA while the other does not during the same period. Comparing the degree of change between the two groups helps reduce the influence of seasonal factors.

Method 3. Splitting users from non-users

This can be used for observation, but it is prone to selection bias: people who actively use EWA may differ from those who do not in income, tenure or circumstances. Do not treat the gap between the two groups as a causal relationship without controlling for those differences.

Method 4. Phased rollout

Open EWA to units one after another according to plan. The business gains more comparison points and reduces the risk of a mass rollout.

Avoid double-counting benefits

A single resignation avoided can at the same time reduce recruitment cost and reduce shift shortfalls. If the business has already put the entire shortfall cost into "replacement-hiring cost," it must not add it a second time under productivity.

Pairs that are easy to double-count:

• Reduced turnover and reduced recruitment cost.

• Reduced absenteeism and increased output.

• Reduced manual processes and fewer HR staff.

• Fewer complaints and payroll time saved.

• Employer-brand value and a higher job-acceptance rate.

Each benefit needs its own definition, data owner and formula.

KPIs to measure before, during and after the pilot

Usage group

• Number of eligible people.

• Activation rate.

• Monthly active-user rate.

• Transactions/person/period.

• Average amount received and its ratio to wages already earned.

• Expected remaining salary.

Operations group

• The rate of attendance approved on time.

• Time from attendance approval to limit update.

• Transaction success rate.

• Disbursement time.

• The rate of transactions inquired/failed/duplicated.

• The number and value of reconciliation discrepancies.

• Remaining processing time for manual advance requests.

HR group

• Total turnover and voluntary turnover rate.

• Attrition in the first 7/30/60/90 days.

• Absenteeism and shift-abandonment rates.

• Job-acceptance and pre-start drop-out rates.

• Workers' correct understanding and satisfaction.

Finance group

• Provider fees.

• Cost of funds.

• Internal costs.

• Replacement-hiring cost.

• Loss/correction value.

• Total benefit, net benefit and ROI.

What should a 90-day ROI dashboard show?

Beyond the totals, the dashboard needs to break the data down by unit, time, tenure or relevant group to find root causes; at the same time, protect personal data and restrict unnecessary access.

A business-case template for the Board of Management

1. The problem to be solved

• The current scale and cost.

• The workforce group affected.

• Why the current process is inadequate.

2. Pilot objectives

• One primary objective.

• Three to five outcome KPIs.

• Risk metrics that must not be exceeded.

3. Scope

• Units, number of people, duration.

• Eligibility conditions.

• Limits and the funding cap.

4. Costs

• One-time and recurring.

• Business and worker costs.

• Cost of funds and cost of capital.

• Risk reserves.

5. Benefits and assumptions

• A formula for each benefit stream.

• Data sources.

• The person who confirms them.

• Conservative/base/optimistic scenarios.

6. Measurement method

• The baseline.

• The comparison group.

• The evaluation cycle.

• How to avoid double-counting.

7. Risks and controls

• Legal, data, cash flow, attendance, payroll, fraud and usage behavior.

8. The decision to be approved

• Budget.

• Pilot scope.

• Project owner.

• Go–Adjust–Stop criteria.

Go–Adjust–Stop conditions after the pilot

Go — expand

• Reconciliation is complete, with no material unresolved discrepancies.

• Operational KPIs meet the approved thresholds.

• The benefit shows a sufficiently reliable signal and the cost is within budget.

• Workers correctly understand fees, limits and remaining salary.

• Legal, data and funding risks are within acceptable limits.

Adjust — continue but adjust

• ROI is not yet positive, but the cause is one-time cost or the operational learning period.

• The usage rate is low due to slow communication/attendance approval and can be fixed.

• There are minor discrepancies whose cause and remedy have been identified.

• The fee model or scope needs optimizing.

Stop — halt or redesign

• It cannot be reconciled with payroll/accounting.

• There is serious overpayment, duplicate payment or a data incident.

• The legal nature or financial liability is not yet clear.

• The actual cost far exceeds the scenario without a corresponding benefit.

• Workers misunderstand it, or harmful usage behavior appears and the control measures are ineffective.

Mistakes in calculating EWA ROI

1. Using a provider's improvement rate as a certain result for the business.

2. Not establishing a baseline before the pilot.

3. Counting only the software fee and omitting internal costs and the cost of funds.

4. Converting every satisfaction metric into money.

5. Double-counting retention, recruitment and productivity benefits.

6. Comparing users with non-users while ignoring selection bias.

7. Using one peak month to represent the whole year.

8. Not separating one-time and recurring costs.

9. Not accounting for risk, inquiries and reconciliation discrepancies.

10. Reporting only a positive ROI without presenting the assumptions and sensitivity.

Conclusion

EWA ROI is only trustworthy when each benefit has a formula, data, a comparison period and a person responsible for confirming it. A good business case must fully account for platform, integration, operations, cost of funds and risk; it must also present the conservative, base and optimistic scenarios.

Businesses should follow four steps:

1. Measure the baseline before deployment.

2. Run a pilot with a comparison group or phase.

3. Complete reconciliation for at least one payroll cycle.

4. Only expand when benefit, cost and risk are all within the approved thresholds.

Businesses can receive an earned-wage-access ROI simulation by workforce size, advance process and actual replacement-hiring data at Earned Wage Access for businesses.

> Note: This article provides a general analytical framework, not a guarantee of investment returns, financial advice or a forecast of results for a specific business.

References

• ILO: Earned Wage Access – A Global Study on Benefits and Risks

• Harvard Business School: Fintech to the (Worker) Rescue — Earned Wage Access and Employee Retention

• CFPB: Data Spotlight — Developments in the Paycheck Advance Market

• Banking Review: The legal nature of earned-wage-access services and proposals for legal adjustment in Vietnam

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Author: Nguyen Minh Khang — Strategy Division Specialist, Nhan Kiet Manpower Supply Co., Ltd.

Consultation for businesses: Hotline 0937.022.655 · Email info@nhankiet.vn · Earned Wage Access for businesses