Giving People Their First Steps Towards Financial Security: DailyPay

DailyPay is a financial services company that provides payroll services such as earned wage access. With its industry-leading technology platform, the company is on a mission to build a new financial system. Partnering with America’s best-in-class employers, including Dollar Tree, Adecco, and Berkshire Hathaway, DailyPay is the recognized gold standard in on-demand pay.

DailyPay was incorporated in 2016 and is headquartered in New York City, with operations based in Minneapolis.

To highlight and further understand what DailyPay stands for and seeks to explore in this segment, I sat down with Scot Parnell, who serves as the company’s Chief Financial Officer.

Below is an excerpt

Pivotal Role Played by Scot Parnell at Daily Pay

Since joining DailyPay, Scot has built a fortress balance sheet to ensure the safety and soundness of the company’s offering. Matched with his entrepreneurial spirit and enthusiasm, he has played a crucial role in not only laying down the cultural foundation at DailyPay but also designing an efficient finance team. An effective communicator and changemaker, he is known to drive visions from “here” to “there.” Also, his strong strategy, partnering, process, and technical leadership abilities make him a valiant leader. 

Scot emphasizes, “This is a key role of a CFO. Me and my team – we help the company pass on good ideas so we can focus on the company’s resources on the great ideas. And for bigger bets – initiatives that would consume significant capital or leadership attention, we apply our business case structure.”

The business case structure steps that DailyPay follows include:

Step 1: Define, Scope, and Validate Opportunity

• Does the target outcome help the company achieve its strategy and required returns?
• What do they have to believe for this to succeed? How do they validate?
• What could failure look like? What is the possible downside? What might DailyPay learn?
• What opportunities does the company forgo by deploying resources here?

Step 2: Project plan – complete with resource requirements, milestones, expected P&L and KPIs, risks, and dependencies. 

Step 3: Ensure organizational alignment to support the outcome. The company engages support teams to ensure they have what they need to help the initiative win.

Step 4: Monitor and learn.

Improving Accuracy in Forecasting Cash Flow

“This can be tricky - even in a mature business. I have been in businesses that are highly predictable and others that fluctuate with the market. While we aspire to predict revenue with a high degree of accuracy, we also want to keep learning more about our customers. By doing so, we find various ways to help them more and be more commercially successful. The same analytical discipline helps both,” said Scot Parnell.

DailyPay always tries to start simple by asking themselves questions such as;

• What is expected from “inertial” actions based on past behaviors, responses to stimuli? (macroeconomic, competitive, etc.)
• What is expected from its team’s actions? (new sales, campaigns, etc.)
• Learn-forward approach: Where are they wrong? Why? What else can we look at that may increase predictability? What do inaccuracies teach them about the market?  
• Drill-down & Tools: DailyPay improves all these issues by employing both intuition and machine learning to look at cohorts, vintages, behaviors. Over time, it will blend in more macro data and customer research.

CYCLE: DailyPay’s Revolutionary Off-Cycle Payment Product

CYCLE is a game-changing product that takes out the hassle of off-cycle payments through digital disbursement, eliminating the need to wait for a paper check to be processed, distributed, and cashed. Prior to the invention of CYCLE, off-cycle payments had to be manually processed, from cutting the checks to delivering them to mailboxes. But that’s only the tip of the iceberg – 37 percent of American workers have paid a personal bill late because of a payroll error.

“So, we were ravaging our minds to think of a solution that not only supported employers but also benefited employees and built CYCLE. With CYCLE, employers can now easily and immediately process off-cycle payments such as missed shifts and termination pay digitally,” Scot Parnell added.

Recent studies have shown that CYCLE saves companies 210 hours per year and up to $47,196 in paper check printing and mailing fees annually. It even reduces a company’s reliance on paper checks by up to 40 percent.

ExtendPX Platform: The Powerful On-Demand Pay API

ExtendPX, powered by DailyPay’s finance technology platform, enables human capital management (HCM) companies to provide on-demand pay to millions of American workers. While 1 in 6 job seekers indicate that they want a daily pay benefit, many HCM providers are unable to offer it for many reasons, including lack of resourcing, experience, and regulatory know-how. ExtendPX flips the system by bringing on-demand pay to employees via HCM providers. It’s a triple-win solution that offers HCM provider’s a flexible menu of modules to embed an on-demand pay solution that’s right for them.

Solutions include: 

Open API – Gives HCM providers complete control over employee user experience.

Embeddable user interfaces (UIs) – HCM providers can control employee UX with little UI development cost or resourcing.

White-labeled app with optional pay card – It is a white-labeling solution for HCM providers that have added benefits for employers and employees alike, including reduced paper check usage and free on-demand pay transfers for employees.

Strategies Involved Mitigating Risks in the Ever-Evolving Finance Sector

It is super important to implement a risk and control process to ensure high velocity of data and active oversight and ensure it makes its way to both frontline staff and leaders. It is also essential to have a culture where driving “return on risk” is rewarded. If done correctly, this can be a competitive advantage and help identify process improvements as well as market opportunities. 

Scot further added, “We manage risk by shoring off material risk while looking for opportunities. During COVID, we found some of the same market dynamics that were causing short term headwinds also availed huge book-building opportunities.”

The Road Ahead

A lot is happening behind the scenes. DailyPay recently partnered with Aite-Novarica Group on a survey about the impact on-demand pay has on the financial wellness of DailyPay’s customer base. The results are impressive. The report highlights how having access to one’s earned pay prior to payday can eliminate financial crippling options to pay bills for many employees in this predicament. Four in five previous over drafters and payday users report never having to resort to payday loans or overdraft fees again after becoming a DailyPay user. DailyPay is a transformative solution that’s impacting employees’ lives, and employers need to hop on it.

A Relentlessly Reliable Leader

Scot Parnell is the Chief Financial Officer of DailyPay. He has spent over 20 years as a finance leader in organizations such as TIAA, Citigroup, and Student Loan Corporation. Mr. Scot Parnell is a CPA and has a

BBA from The University of Texas at Austin and an MBA from Columbia Business School. During his free time, Scot enjoys time with his family, hiking, and cycling.

“While we aspire to predict revenue with a high degree of accuracy, we also want to keep learning more about our customers. By doing so, we find various ways to help them more and be more commercially successful.”

“CYCLE, DailyPay’s game-changing product saves companies 210 hours per year and up to $47,196 in paper check printing and mailing fees annually. It even reduces a company’s reliance on paper checks by up to 40 percent.”