When choosing between salary and other forms of compensation, you should consider the advantages and disadvantages of each method. Salary pay is generally seen as the norm in many industries and jobs. It’s certainly a great option for employees who want to be paid a set amount each week or month. However, salary doesn’t always fit all employees. For example, if an employee has no experience and has never had a job with any particular company before, it might not be best to offer them a salary in the beginning since they will have no way of gauging their worth to the company. So let’s check out the advantages of the salary pay method so you can see for yourself if it is better or worse than piece-rate pay or hourly pay:
1. Costs associated with budgetary purposes are stable
A salary basis of accounting is easier to manage than a periodic basis of accounting because it enables the business to keep track of cash and other assets at any given time. The firm’s financial records will show exactly how much money the business has on hand, which makes it easier for managers to know when they need more funds or when they need to spend less.
2. It is easier to process payroll
Payroll processing is a tedious task, so it’s much easier to do it once and then forget about it until your next pay period rolls around. If you have employees with variable paychecks (like commission) or on contract, this can be even more of a headache, as commissions tend to fluctuate throughout the year due to sales plus you need to track multiple things like the cheque number and bank account details. This is because if your company hires people as a freelancer for instance then you need to frequently update your records based on the people who joined and left since the freelancer worker base changes faster than fixed employees. But this isn’t true for salary employees — while you still need to track some details however there’s no need to track how much an employee earned or how much money he made in a given day or week; all you need to do is provide him with his check every month or two and send him out on his way!
3. Adds prestige
Salary pay is an established way of paying people for their work. This means that it has a reputation for being prestigious and valuable, which can help make it easier to attract employees in the first place. If you have a fixed salary, you’re not going to have to worry about negotiating rates with different freelance contractors or other job candidates.
4. Employees have the freedom of planning their finances
Salary provides a predictable monthly income directly into the real account, which gives employees more flexibility over how they spend their money and control over their future financial prospects. With this type of salary system, employees can choose whether they want to save up for a house deposit or take advantage of the higher interest rates offered by savings accounts during the year, for example.
5. More flexibility for employers and employees
Salaries can be paid at different times during the year, depending on when your company decides to pay its employees. This means that you don’t have to wait until the end of the year to get paid, which may be inconvenient if you’re planning on taking a vacation or other type of leave from your job.