At the end of the month (or any other suitable period) he can withdraw the remaining balance, from which the shareholder dividend is deducted (some percentage, e.g. 10%), and the rest is basically his (gross) salary.

This account system can be somewhat fine-tuned and elaborated to allow employees to withdraw money and make deposits at any time. The individual accounts can be technically regarded as current accounts.

I have plans to investigate the possibility of using a real bank to host the accounts, so that users can also earn some interest rate. It won’t be a big percentage, but you can still earn a few dollars each month, especially if your monthly transactions are in the order of tens of thousands.

I think this would become an interesting new service for banks once more companies adopt internal transactions.

All in all, I don’t think the technicalities of the employee current accounts pose significant difficulties.

Regarding authority: the money in the current accounts belongs to the employees, so you don’t really have to give them authority to spend it.

More fundamental questions arise with the procedures for internal investing.

Because employees can pay their peers, they practically turn into investors. I want to extend this concept, so that employees are free to pay not only for services rendered by their colleagues, but also to invest in fixed assets (such as machinery). My guiding principle here is “investments should be managed at the level (divisional, departmental, team, etc.) at which they are utilised”. Contrast this with the traditional situation where internal investment management is largely centralised.

To facilitate internal investing, especially for mid- and large-size companies, it makes sense to introduce an internal system for credit rating. Last year I had a talk with an analyst from Experian-Scorex (a big intl. firm in the business of credit rating systems, doing the back-end processing for a number of banks). Unfortunately, she told me they had no such systems. Again, here you have the potential for another interesting banking product.

Why is internal credit scoring needed?

Let’s say, a particular employee decides he needs a $10′000 infusion into his account for some new project. In such a case, the internal credit scoring system would estimate the credit risk and may suggest a (minimum) interest rate. This estimation may be based on his credit record and/or on his monthly transaction revenues. The money could be provided by a colleague or by the bank for example.

I hope I managed to answer your questions. If something I wrote doesn’t seem clear to you, please do ask for a clarification

So, it would seem as though the success of this is predicated on the notion that each employee has personal money or a budget with which to pay peers? I imagine that in a start up, this suggests an infusion of cash into the system and some means of distibuting authority over how that money is spent? Or am I making this too hard?