I've often wondered whether companies are justified in paying their employees their salaries towards the end of the month and not on a daily basis. In other words why should employees give their employers a month's credit ? The corpus that companies like Infosys, IBM etc payout towards salaries amounts to a few hundred crores every month. For example, taking an average salary of Rs 50000, IBM India spends an approximate amount of Rs 500 crores monthly. Invested at even 5% interest, just imagine the amount IBM must be making month on month, year on year !
What happens to all this money ? How is it shown in the Books ? Should not these benefits be passed on to the employees ?
Companies in the US make salary payments fortnightly. I guess that's somewhat better but the argument remains the same.
Of course, since I'm not an economist, I'm not sure if there is something fundamentally flawed with this thinking. Also, I'm not sure how clients make payments for projects executed - before, after or during.
But I keep wondering. Am I onto something ?
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