Payday Loan Business: A Magical Method to Increase Profits

Face it! Paying your payday loan employees $8.00 to $12.00 per hour just won’t get the job done. You have to incentivize your people to achieve your goals.

Doesn’t seem fair does it? You’d think a decent hourly wage with a couple of breaks and lunch thrown in would do it. But it doesn’t.

You want a tip? Figure out what you’re trying to achieve and pay your people a bonus to get it done.

You want examples? Here’s what works for us.

When we open a new payday loan or scrap gold location WE WANT TRANSACTIONS! We want to fund loans; as many as we possibly can. So… after checking our competition, studying the demographics in our area, formulating our advertising spend and determining how much money we have available “for the street”, we give our payday loan and car title loan store reps a minimum target and pay a bonus for every transaction exceeding this target. WE PAY THIS BONUS DAILY!

Now, the exact numbers will vary depending on the size of the market we’re in. But our employee bonus system looks something like this.

Our goal week 1 in a new market might be to fund 3 loans per day per employee. (In small markets with plenty of competition we might only have one employee working 10 hours/day.) Our bonus system might pay $5 per funded payday loan beginning with #4 for the day. So should our employee get 6 payday loans funded that day, they earn their hourly wage plus a bonus of $15 PAID AT THE END OF THEIR SHIFT.

(REMEMBER! That new payday loan customer could easily be worth $5000 or more in fees over their lifetime.)

We might implement this bonus system weeks 1 through 4 and then adjust it to a minimum of 6 per day week 5.

Don’t forget to adjust! Perhaps by week 30 you’re more concerned about collections than you are about transaction volume. As discussed in our Payday Loan Collections Manual, place your overdue receivables in buckets; 0 – 30 days, 31 – 60 days, 61 – 90 days, 91-120 days, and 121 days+.¬† You might pay your employees a percentage of dollars collected; a little more for each bucket. Or a flat fee per contract paid on.

Now, I’m not going to discuss the justifications for paying IMMEDIATE bonuses to an employee for simply doing their job. And we don’t need to quibble about the actual numbers/goals other than to say you must make the target a challenge, communicate it to your employee, MAKE IT SIMPLE and yet be achievable.


Get creative.

This system works for both our stores and our Internet business and for a multitude of products we offer.

Good software makes this bonus system MUCH EASIER TO IMPLEMENT. See the software chapters in our Payday Loan Manual and our Payday Loan Internet Report.

Empower your people. Set them free. Trust them. The amount of trust that Google puts in its employees and how amazingly those employees deliver results is impressive. This works for our industry as well.

Organize and simplify. (You really should read, “The E-Myth Revisited“)

Finally, as a business owner, the need to implement a bonus system to motivate your employees to perform their job may seem REALLY UNFAIR. GET OVER IT! JUST DO IT!!


What do you think? Jer@PaydayLoanIndustry.com

What’s your biggest problem? Jer@PaydayLoanIndustry.com

Need our Collections Manual?

Want to start a Payday Loan Internet Business?

How to start a Payday Loan Business?

Comments ( 5 )
  • Blake says:

    Some excellent ideas here. Common sense but we tend to overlook concentrating on immediate goals for our stores, creating simple employee incentivation reward systems and then clearly communication them “down the line.”

    The other aspect I like is to pay my people at the end of the shift; not 3 months later. Employees love this!

    Blake AAA Financial

  • Faithe Andrews says:

    This is so true! Its important to create financial incentive for your employees to perform. I used to work in a sales organization that used “SPIFs” (special performace incentive fund) at random times to motivate employees to achieve desired business objectives. For example, you might send out an email on the 20th day of the month offering $100 to whoever collects the most past due accounts by the end of the month.

    As mentioned above it is important to maintain control of these incentives. Using a qualifier is one way that I have seen this done before. An example from the title loan world might be, we will pay a $5 bonus for every loan above 3 per day where the loan value is less than 40% of the vehicle value. This ensures that employees arent approving bad loans simply to achieve personal financial gains.

    • admin says:

      Faith, you’re right on! Incentives must be monitored, evaluated and ADJUSTED as company goals change. Typically, a start-up will have transaction volume ramp-up issues that a mature payday loan or car title loan lender may not face. It could be collections, employee theft, regulatory issues, loan management software…

  • John says:

    Good points.

    One thing to consider is that you have to be careful not to over-incentivize or else you may create monsters out of your employees. You certainly don’t want them acting in their own best interest over the company’s. Otherwise, you may have employees not following proper underwriting procedures with the sole purpose of writing the loan and leaving the company with an uncollectable receivable.

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