Why are salaries usually paid monthly instead of continuously?
1 Answer
Faisal Khan
Answered 11/Jan/2018
I’m going to take a guess here and say, the practice comes from the agricultural days, when salaries, etc. were paid in defined periods after the harvest was sold. The same rule applied to soldiers, who were paid when they came back to their home base.
The crown’s disbursement of funds were always periodic in nature, usually aligned with the harvest, the collection of taxes and war loot. These were not continuous mechanisms.
The same practice was carried on even as we approached the industrial age. It was just easier to process and disburse salaries in batches.
Even today, with the electronic banking & payment infrastructure, one cannot pay continuously. We can come pretty close to it, but not continuous.
It might be a while before we become just-in-time economy, where the money received and paid is continuous. However, slowly we are trying to break away from the norms of the cyclical (2-weeks/monthly) payment patterns.
There is quite a lot of effort required to compute things down to the minute and process the same. Whilst you may certainly be excellent on this, it might not be financial viable to do so. For a small company it might not matter to give salary every day at the end of the day (even though that is not continuous), but for a large organization, it might not be possible, one where there are say 18,000 employees. The HR system, etc. all would be pushed to the limit. And would it be fair, the salaries are paid our immediately (read: continuously), yet the income is on a batch basis, so the mismatch may not be suited well for the company’s finances.