Employees are the most significant assets of a business. With rising attrition amid the pandemic, businesses are getting more employee-focused and are thus embracing the new working models, including flexible work hours to support employees and ensure smooth business continuity. Implementing these improvements has various benefits but has numerous challenges too for the business, including increased complexity of the payroll processes. Thus, revamping the payroll processes with advanced payroll systems to enable flexible payments for flexible work is the need of the hour. Businesses leverage top payroll software solutions to enhance their payroll systems, accommodate flexible working, offer flexible payments, save costs, reduce attrition, and boost profits.
The News:
- Almost half of the US employees leave their jobs if they experience problems with their paychecks twice.
- Payroll needs for all industries are rising steeply. By the year 2030, the number of employees working in food and beverage stores alone will have increased by around 2.14 million.
- The average hourly pay for a Payroll Specialist is $20.77.
- Companies with payroll and timekeeping functions integrated into their payroll solutions beat their revenue targets by around 7%.
- 54% of employers believe their current payroll policies and practices need improvement.
- 40% of small to mid-sized businesses incur IRS penalties for incorrect payroll filings.
- Integration of automated timekeeping increases your chances of not having a payroll error rate by 44%.
- Studies indicate that 78% of full-time workers live paycheck to paycheck.
- The global market revenue of payroll software is forecasted to reach USD 5.1 billion by 2025.
- The Global HR Payroll Software market is projected to reach USD 41.9 billion by 2030.
- Employees prefer payroll cards over other comparable alternatives or other forms of payment, including direct deposit.
How did we get here?
#1. Payroll Challenges That Businesses Must Overcome to Perform Better
Payroll is a complicated process involving numerous functions. Businesses that manually manage payroll face numerous challenges, including:
- Manual payroll errors lead to added costs and employee frustration.
- Maintaining payroll data and ensuring its security, storage, integrity, and confidentiality is complex and time-consuming.
- Payroll operations consume excessive time and resources and require experienced staff, adding overall costs for businesses.
- Compliance management is critical but difficult; moreover, companies need to ensure global compliance to control the global workforce.
- Errors in compliance management and missed deadlines cost businesses heavily.
- There is a constant need to update the payroll processes for continuously changing tax and compliance norms.
- Underpayments and overpayments result in rework and increased costs apart from other damages.
- Delayed payments or errors in payments frustrate the employees and result in increased attrition.
- While flexible and hybrid working models have numerous benefits, companies cannot implement these working models due to increased payroll complexities.
- Growing companies need to control ever-increasing payroll data, making the operations more complex and error-prone; this ultimately limits steady growth and scalability.
- Payroll frauds cannot be detected on time, resulting in enormous damages for businesses.
#2. How to Create a Flexible Payroll for Flexible Working?
The pandemic has changed the way businesses work. Companies have adopted new working models to ensure uninterrupted work, including remote working, hybrid working, and flexible work hours. This helps employees manage their personal lives better, ensuring higher employee retention for businesses. The Covid outbreak also created a shortage of supplies and added medical expenses. Thus, businesses are now adopting flexible payments to extend financial ease, access, and support to their employees. Flexible payments due to flexible work hours are thus making headlines.
Here are the top tips for businesses to enhance the payroll system for flexible payments to embrace the new working models.
Managing Global Employees
Payroll processes get more complex with global employees. Different countries have different statutory norms for payroll, tax models, regulations, and compliance requirements. Moreover, employers need to manage payments in various currencies and through variable payment modes as prevalent and permissible in those countries. Also, employees from some zones are habituated to the monthly payroll system, while others may prefer biweekly or weekly payments. Another significant challenge is that employees work in varying time zones, making work and time tracking difficult.
With the rising success of remote working, companies are hiring globally more than ever. While global hiring has numerous advantages, including better talent reach at reduced costs, it poses various payroll processing challenges for the HR and accounting departments. Adopting flexible work hours model solves the timezone challenges for global employees; however, the traditional or manual payroll system cannot handle the complexities of tracking time and productivity in this work model. Businesses thus must leverage a software-based flexible payroll system to solve these issues and accommodate the global workforce.
Work-Based Payments
New working models are a necessity and no more a choice. Nevertheless, the success of these models depends on how well the business processes have evolved to accommodate flexible work hours, remote working, hybrid working, etc. Traditionally, the payroll systems relied on employees’ attendance on the office premises during the fixed working hours. Payroll operations thus need a significant overhaul to offer work flexibility to the employees. Companies need a different way of measuring work that is not entirely attendance or hours dependent.
A good and easy way to solve this problem is to shift to work-based payments. Companies pay the employees on a per-hour, per-task, or per-project basis in this system. Payments are thus based on work quantity instead of attendance. This model helps solve productivity tracking issues in hybrid, remote, and flexible working environments and is highly cost-effective for businesses. It also supports managing freelancers and remote workers whose work cannot be adequately tracked through the traditional system. Companies must thus ensure that their payroll system has all the requisite features to manage and take full advantage of the work-based payment model.
On-Demand Pay
Employee attrition has drastically increased globally after the Covid pandemic onset and due to the Great Resignation wave. Companies are thus trying to enhance employee satisfaction more than ever. Companies adopted flexible working models to help employees solve their personal issues and enhance work-life balance. The pandemic has also resulted in financial challenges for employees due to increased medical needs, expenses, shortage of supplies, pay cuts due to business losses, and more. Thus, companies must ensure easy and early access to payments to their employees. Adopting flexible pay or on-demand payments can help employers solve this issue and improve employee retention.
Flexible payments or convenient pay is a way of making the employees’ earned wages available to them in real-time instead of the traditional system of monthly payments. In this system, companies provide payroll cards or employer-issued debit cards (or virtual bank accounts), which the employees can use to withdraw their salary accrued till the present day anytime in the month, without having to wait for the month-end; for example, on the 15th of the month, the employee will have a withdrawable credit of approximately half of his salary amount on his payroll card. However, to facilitate flexible pay, companies require advanced software-based payroll processing with real-time updates.
Timely Payments and Transparency
Payroll operations are complex, and manual processing involves too many dedicated employees. Any delays at one level can significantly delay the payroll cycle, delaying the employees’ salaries. Delayed salaries cause employee frustration and cost the companies heavily.
Companies must prepare a payroll calendar with clear timelines for various stages of the payroll cycle. They must ensure that the timelines are followed diligently to avoid delays in payments. Moreover, employers should be transparent with their employees about the payments. They should provide an employees’ portal where the employees can view payroll information, including their salary slips, salary structure, statutory & other deductions, and other payroll details that employees frequently need access to.
Leverage Payroll Software
Businesses can solve various payroll challenges, enhance payroll management, and provide flexible and transparent payments to employees simply by leveraging payroll software. Cloud-based payroll tools also offer employee self-service portals for ease, enhanced transparency, and better employee experience. Moreover, businesses must choose software that supports flexible payments too. We will discuss payroll software's detailed offerings and benefits in the next section.
#3. How Investing in a Payroll Tool Is a Safe Bet These Days for Businesses
Payroll software can help resolve all the payroll management challenges discussed above. The software thus allows businesses to perform better, enhance employee satisfaction, and boost profits. Here are the top benefits of adopting reliable payroll software for your business.
Automation of Repetitive Tasks
Payroll is a combination of various repetitive tasks and functions, which can be complex and exhausting for HR and accounts personnel. Payroll software enables the automation of routine and repetitive payroll operations that consume excessive time and resources for businesses. The payroll staff can thus concentrate better on other tasks.
Enhanced Accuracy and Scalability
Due to the complexity and volumes of data, manual payroll is prone to unaffordable errors for businesses. These also lead to frustration and distrust for the company among employees. Payroll software can control vast volumes of data with much ease. Leveraging payroll software ensures enhanced accuracy due to the elimination of human error. It thus also supports easy scalability for business growth.
Better Payroll Management
Typically payroll processes require skilled and experienced staff. Payroll complexities further increase with increasing volumes as the companies grow. Companies thus find it difficult to manage payroll processes with new or less-skilled employees. Additionally, the data is confidential and must not be shared with too many personnel to ensure security. Software-based payroll systems enable better payroll management even with complex payroll data and processes without too many dedicated personnel.
Easy Access and Updates of Payroll Data
Payroll software allows easy access and updates of payroll data. Cloud-based solutions also ensure real-time updates that enable HR departments to work flexibly and still meet deadlines for the various stages of payroll operations. Moreover, multiple departments use payroll data, including HR and accounting. The software enables easy sharing of the data across departments.
Enhanced Productivity
The payroll software saves significant time and effort for payroll personnel. It thus enables a remarkable rise in the payroll department’s overall productivity in the longer run.
Reduced Costs and Increased Profitability
Payroll processes consume enormous time and resources for companies. Leveraging payroll software helps businesses conserve time and resources and enhance productivity, enabling a notable overall cost reduction. Thus, the software allows businesses to boost overall profits at nominal costs.
Informed Decision-Making
Payroll data can provide valuable insights into employee productivity, compensation planning, work & staff scheduling, staffing capacity, expenses, competitiveness, etc. Adopting payroll software to handle payroll data and operations enables businesses to record and analyze payroll data. Detailed and customized analytics and reporting through payroll tools provide business intelligence insights for informed, enhanced decision-making, supporting business growth.
Compliance Management
Payroll management requires strict adherence to numerous tax and compliance norms. These are not just complex but also keep changing rapidly, posing additional stress on the companies. Moreover, any deficiencies or delays in compliance management can lead to severe penalties and loss of reputation. Payroll software offers all the necessary tools to ensure diligent compliance management, timely payment of taxes, alerts/reminders, and more. Besides, software-as-a-service or SaaS-based payroll solutions take care of the updates in compliance and tax norms and ensure flawless compliance management.
Information Security
Manual payroll management can put sensitive payroll data to risk due to manual errors, unauthorized access, password leak, data theft, loss of data, and many such risks. Payroll software helps businesses reduce and eliminate such risks and ensure enhanced data security and confidentiality.
Enables Flexible Work and Payments
Flexible working, including hybrid working, remote working, and flexible work hours, offers numerous benefits to employers and employees. However, tracking time, attendance, productivity, and compensation is challenging in these new working models, aggravating payroll challenges. Modern payroll software offers advanced tools to solve these challenges. It enables flexible working and flexible payments, benefitting both employees and employers.
Employee Satisfaction
Payroll errors lead to employee demotivation and attrition, as discussed earlier. Flawless and flexible payroll helps increase employee satisfaction, loyalty, and retention. It thus ultimately reduces employee attrition, saves hiring costs, and boosts the company’s reputation.
What’s Next
Companies are rapidly adopting innovative ways to keep their employees happy and reduce attrition. Allowing flexible work hours is another step forward in enhancing employee satisfaction and overall business performance. However, flexible working is not enough; now, companies realize the need to offer flexible payments to support and motivate employees further. Flexible payments due to flexible work hours are making headlines and being embraced by businesses globally.
Managing flexible payments poses numerous payroll challenges for businesses. Companies must adopt the right Payroll Software, HR Software, or Accounting Software that includes flexible payment capabilities to ensure flawless payroll processing amidst the changing trends, new working models, and increasing employee needs & expectations to stay ahead in the competition and rise steadily.
