US / Israeli startup, Sorbet – a company deals with financial risk when employees earn paid time off (PTO) – has raised million $6 million in a seed fund round led by Viola Ventures in partnership with Global Founders Capital Meron. The economy of paid time off is relatively hidden in the business world but basically,
Sorbet takes the burden of this PTO from the employers and then lets the employees spend it.
This gives employers more control over the whole process and the ability to predict its impact on the business. Sharbat says workers in the U.S. use only a 2% PTO balance, although this is the most sought-after benefit. However, it effectively publishes off 786 million unused days a year, valued at about $224 billion.
Sorbet says this creates a difficult problem for CFOs and accountants because it creates balance sheet liability the company’s books. If employees do not use all of their PTOs, employers may end up paying them a lot of money which creates a cash flow obligation in the company’s books. So Sorbet buys these PTO liabilities from employees, and then loads the cash value of the PTO into prepaid credit cards for employees. Speaking to me on a call, CEO and co-founder Veetahl Eilat-Raichel said: “We researched the whole idea of spending paid time and found this huge, huge market failure and inefficiency around the way the PTO was built.
It’s the kind of thing where in front of it, this boring bureaucratic pay-roll item that turns into a boring balance, sheet item. But the $224 billion problem for U.S. businesses under it, if you think about it, employers are taking the worst from their employees and employees are not getting any benefits. Everyone is in pain here.”
He said: “Sorbet takes responsibility, on its own and then we can let the company control their cash flow and decide when they want to give us back. They gain a lot of financial value because we are able to be very, very attractive on our funds. So it saves costs, gives them complete control over their cash flow and gives them amazing financial benefits to employees at a time when we can use some extra cash right now.”
