{"id":7883,"date":"2020-09-15T14:53:00","date_gmt":"2020-09-15T14:53:00","guid":{"rendered":"https:\/\/www.dailypay.com\/?p=7883"},"modified":"2022-01-25T15:07:35","modified_gmt":"2022-01-25T20:07:35","slug":"credit-checks-on-demand-pay-providers","status":"publish","type":"post","link":"https:\/\/www.dailypay.com\/resource-center\/blog\/credit-checks-on-demand-pay-providers\/","title":{"rendered":"The Importance of Thorough Credit Checks for On-Demand Pay Providers"},"content":{"rendered":"\n

A few recent bankruptcies have taken a large toll on the on-demand pay industry. Lord & Taylor<\/a> department store, NPC International<\/a>, which is the largest franchisee of Pizza Hut in the United States, CEC Entertainment<\/a>, which is the parent company for Chuck E. Cheese, and CraftWorks Holdings<\/a>, the parent companies of Logan\u2019s Roadhouse and Old Chicago Pizza & Taproom all filed for Chapter 11 Bankruptcy over the past few months. Their on-demand pay vendor is now owed close to a million dollars from unrepaid loans for employee transfers. <\/p>\n\n\n\n

Situations like this can affect the on-demand pay provider\u2019s ability to provide adequate service to its existing partners or its ability to afford to take on any new partners in the future, which is important to consider when selecting an on-demand pay provider.<\/p>\n\n\n\n

Why a strong credit check process is essential<\/strong><\/p>\n\n\n\n

There\u2019s certainly a lot of information out there on how to select the best on-demand pay provider <\/a>for your company. However, one element of the selection process that is often overlooked is ensuring that the provider has a strong credit check process in place for new employer partners. Choosing an on-demand pay provider who doesn\u2019t vet employers that they plan to partner with can be extremely risky. It\u2019s risky because the provider is assuming new financial risk associated with less financially stable partners, and in cases where those companies go bankrupt or are unable to repay their debts, your service from the provider may be negatively affected through their loss of funds.<\/p>\n\n\n\n

An on-demand pay vendor needs to have thorough credit risk underwriting and management processes in place to make sure the platform can service all of the employees from all customers at all times seamlessly, including the new users that are brought on as the company grows. Without these rigorous processes in place, one customer\u2019s financial difficulties could lead to service disruption for all users, including for employees of other customers. The recent bankruptcies mentioned above have highlighted how vendors’ safety and soundness can be put at risk without a proper credit and risk underwriting process.<\/p>\n\n\n\n

Protecting our partners and their employees<\/strong><\/p>\n\n\n\n

To avoid this risk, DailyPay has a thorough credit check process as a part of our partner onboarding journey. Every potential DailyPay partner goes through:<\/p>\n\n\n\n