If your business leverages employment or income information to make important decisions, for example, around hiring and lending, it’s critical to have an effective and efficient verification process.
Below, we outline income and employment verification, take a look at traditional verification methods, and explore modern solutions made possible by technological advances. We also review some of the most powerful use cases for this new class of verifications.
What is income and employment verification?
Before diving into the use-cases for income and employment verification, let’s first review the basics of what they both are:
Employment verification is the process of validating that what an individual has told you about their employment history and status is correct and truthful. At its simplest, it might involve verifying that a user did, in fact, work for a particular employer. A more comprehensive check, on the other hand, might verify specific dates of employment. It’s also called proof of employment (POE).
Income verification, on the other hand, is the process of validating an individual’s income. This can include their level of income (how much money they make), their source of income (their employer), and their frequency of income (how frequently they are paid). Income verification is related to employment verification and often done at the same time.
Traditional verification processes require significant manual processing and time
In the past, verifying someone’s income and employment required a lot of heavy lifting. First, you’d have to collect the information directly from the individual — usually in the form of a pay stub or bank statement. Then, because it’s possible that these documents were forged or altered, you’d need to reverify it by calling or otherwise contacting the employer.
From start to finish, income and employment verification could take days or longer to complete — slowing down your ability to make important decisions, and potentially hurting conversion rates. It could also involve significant payroll expenses, especially if you processed a high volume of applications that required you to hire someone (or a whole team) specifically for the purpose of verification — all of which cuts into your bottom line.
But thanks to consumer-permissioned data and advancements in technology that make it possible to connect directly to payroll providers, income and employment verification can be done instantly in seconds. This empowers you to make faster, more informed decisions, convert more customers or users, and reduce your business’s costs.
Use cases for digital income & employment verification
Digital income and employment verification involves connecting directly to a payroll provider’s system with permission from the consumer, where you gain access to the treasure trove of consumer-permissioned data stored within that system. This information can be leveraged in a number of novel ways, which we explore below.
1. It gives you access to alternative credit data
What do lenders, landlords, insurers, debt collectors, and utility companies all have in common? In order to make intelligent business decisions, they each rely upon the information held within a consumer’s credit report.
Unfortunately, credit reports don’t contain all of the possible information that can be used to gauge an individual’s creditworthiness. The result, sometimes, is an incomplete picture that often leads to faulty business decisions.
The good news is that, in recent years, there has been a proliferation of alternative credit data: information not typically found in a consumer’s credit report, which can be used to enhance the report and paint a fuller picture of the individual’s ability to make payments. An individual’s employment status, income level, and recurring payroll deposits — information that can be accessed through a payroll provider — can all act as alternative credit data.
If you’re in the business of making decisions based on the information held within an individual’s credit report, augmenting that information with alternative credit data can help you make smarter business decisions.
2. It serves as a form of identity verification
Payroll providers’ systems store much more information about an individual than just income information and employment status. They also house information such as an individual’s full legal name, eeedate of birth, Social Security Number, supporting documents, and potentially even scans of government-issued ID that can be used to verify the individual’s identity.
Certain businesses, such as those operating within the financial industry (banks, lenders, insurers, etc.) are required by law to verify the identity of their customers during the account creation process. But with the rise of identity theft, businesses of all stripes have begun to embrace identity verification as a necessity.
In other words, identity verification is big business. If you are already planning to leverage income and employment verification for your business, going one step further and utilizing consumer-permissioned data to verify the individual’s identity can be a smart way of reducing fraud while saving on costs.
3. It empowers you to make personalized offers
The alternative credit data that you gain access to through income and employment verification doesn’t just allow you to make smarter lending decisions. Because it gives you a clearer picture of the financial health of your applicants, it also empowers you to make personalized offers that are tailored to your applicants’ ability to pay, as demonstrated by their income.
You might, for example, leverage income data to pre-screen and pre-approve applicants during the application process. This pre-screening can help you move your applicants further down the funnel even as additional verification is being completed, reducing friction and improving conversion rates.
Alternatively, you might leverage the data to enrich your marketing database, allowing you to segment your direct, email, and social media marketing efforts to a greater degree. You could, for example, generate invitation-to-apply (ITA) marketing campaigns that target only individuals with a certain earning power.
4. It enables tenant screeners to verify income and employment for pre-approval
With the rental market accelerating across the U.S., it’s essential for landlords to attract and retain the best tenants. However, legacy methods of verifying income and employment can cause landlords to take days to make decisions, which causes tenants to look elsewhere for their real estate needs.
By enabling potential tenants to connect directly to their payroll account, landlords receive the verified identity, income, and employment data points they need to make a decision surrounding pre-approval often within 60 seconds. This data is delivered in real time to minimize fraud risk and drive cost savings compared to manual labor required to verify documents.
Modernizing your income and employment verification process with Truv
At Truv, we understand how important income and employment verification is for your business. That’s why we’re working hard to modernize the verification process and put the power of consumer-permissioned data at your fingertips.
Our income and employment verification solution integrates with more than 50 payroll providers, including ADP, Quickbooks Paychex, SAP, Square, BambooHR, and more — allowing you to automate and significantly speed up your verification processes.
Comprehensive coverage is at the core of who we are and fundamental to verifying income and employment directly via payroll providers. Users must be able to access their payroll provider or you’ll be back at square one. Truv’s coverage is unmatched with 122.5M working Americans covered, 2.3M US employers covered, 47 payroll providers, 150K employers mapped to payroll providers, and more!
Simply direct your applicant to log into the appropriate payroll provider’s interface, and within seconds you’ll have access to more than 100 different data points that you can use to make the right decisions for your business.
Interested in learning more?