According to the IRS, more than 45% of small and medium-sized businesses in the U.S. are paying payroll penalties each year. Most are due to not depositing withholdings correctly or on time due to filling mistakes. This is not shocking since calculating payroll is not easy work. Busy juggling employee salaries and wages, staff incentives and benefits, tax deductions, and leaves makes things even more complex quickly. Also, each state has its own individual tax regulations, and thus it’s easy to miss some details if not careful enough.
Running an enterprise is expensive. Adding payroll penalties to your expense list only makes this more difficult. We must be thankful for the technological advancements for human resources, where the future of payroll is more focused with less errors. It is crucial to remain updated with these latest trends in technology within the payroll industry in order to stay a step ahead of the competition.
Below are listed the seven critical trends to expect in the future of payroll processing.
- Using a Cloud Technology
The cloud-based payroll solutions market is expected to grow to over $14 million by the end of year 2025. Cloud-based computing enables you to access the data from anywhere using any type of smart device. As remote working has become increasingly popular, it’s particularly helpful for HR teams to manage payroll effectively. It saves workers the trouble of coming into a physical workplace in order to process and complete tasks.
Moreover, automated payroll systems enable managers, HR professionals, and workers to access payroll information in real-time, including their PTO requests and pending leave balances. In addition, protecting on-premise payroll solutions from computer hacks, and cybercrime could turn into an expensive affair. Thankfully cloud-based computing has multiple protective services, such as consistent software updates and cybersecurity, to always ensure your data is safe and secured.
Plus, it also allows you to scale your business easily. When the company starts to develop and evolve, you do not worry about replacing the existing system you simply update the services you require. The payroll software can scale with you.
- Integrating Payroll and HR Software
There are multiple advantages associated with integrating an HR solution with payroll. For starters, integrated software solutions allow employers and team members to access all mandatory information from a single dashboard. Combining payroll procedures with the best HR functionalities can enhance managements effectiveness to handle staff data.
Many SMBs assume investing in human resource technology is too costly, but this is simply not true. A good HR management system is accessible to all at affordable prices with large ROI, outweighing the expense of a system.
HR solutions helps you with HR tasks and duties, such as scheduling employees shifts and time tracking for all staff. If your payroll system integrates with the HR software you select, you can easily share the data across both systems. It ensures no payroll frauds or error ever occur by constantly monitoring staff working hours accurately so nobody is underpaid or overpaid for worked hours.
With all the data within a single solution, the software can pool appropriate data together in order to create actionable insights. Payroll and HR software integrations will allow all companies to generate personalized reports on their employees, which stores all information on staff members and their compensation packages.
- Pay Rate Transparency
Many organizations are moving towards sharing wage information and details more accessible to the employee. Including the salaries of all staff members from executives to part-time employees. Helping staff understand the methodology behind compensation packages and why they are paid that amount promotes equality and fairness within the entire business.
Plus, pay rate transparency motivates your staff to work harder when they know their performance will influence their compensation packages and rates. It also eliminates the chances of biased treatments amongst teams or departments. It helps communicates the value of the individual employee as well as the organizations culture in terms of fair pay and treatment which affects the employers brand image directly.
- Enhanced Data Security
In the past few years, new laws and regulations have forced payroll systems to be GDPR-compliant. It signifies any sensitive information you enter into the system is automatically protected with the highest cybersecurity standards on the market. Each organization has a massive chunk of staff details to protect. These systems hold sensitive information like employee account numbers, wages and compensation plans, addresses, and social security numbers. Advanced functions, such as multi-authentication access secures all highly confidential information, plus supports more traditional safety measures like security questions to protect your data the way you need.
- Embracing Artificial Intelligence (AI)
Artificial intelligence has gained popularity in multiple fields and industries, such as payroll, has a few key benefits. Previously, payroll services were only calculating staff wages, paying them, and then creating a simple report. Now, technology is transforming this entire process, because the future is demanding more. AI is revolutionizing the way employees are being paid and records being stored for later. For example, it can help automatically classify staff members and verify they are within the right tax brackets and have all leaves calculated correctly.
Plus, in this data-driven world, it is critical to assess the massive amount of payroll data collected throughout the years. The analysis of these statements can give you actionable insights, help spot unnecessary costs, shape the future budget of the organization and contribute to the overall growth and success of the company. AI-based chatbots can be leveraged to aid staff with answering and completing simple requests. Hence, rather than waiting for a team member to get back to you, staff can get their simple queries answered using an automated chatbot, receiving the answer within minutes.
- Higher Demand from the ‘Gig’ Economy
Technology allows employees to work from anywhere, and has given rise to a steadily evolving number of gig workers as well as freelancers. This economic shift from traditional and full-time employment to a mixture of third-party staff members like contractors have made the situation even more complicated. Outdated systems are not properly equipped to manage a dynamic and spread out workforce. Payroll software solutions make it simple to effectively manage a perfect blend of full-time and gig staff.
The solution can help you handle all temporary staff more efficiently. Also, if you integrate the payroll solution with a project management system, you can monitor their work progress and issue payment in a timely manner on the completion of a project or job.
- Financial Wellness Packages
Staff retention rates are directly proportional to the employee overall satisfaction with their team, department, and company. To enhance productivity within the workplace, keep your employees motivated and engaged each day. Many workers cannot concentrate on their work for hours at a time if they are worried about their financial well-being. Plus, too much stress can contribute to mental and physical illnesses.
The idea is to minimize your workers’ financial and emotional stress and improve their morale in order to help them be more productive. For this reason, several payroll suppliers are beginning to include some type of financial wellness program into the solution they offer. These programs may include counselling your employees and guiding them through topics such as the importance of retirement planning and how they can allocate their money for the future. It can also help ensure the workforce spends less time stressing over dollars in the bank and more time being productive at the work and enjoying enough time with family outside of the workplace.
- Multipurpose Systems
It is unavoidable to overlook the importance of investing in an optimized business solution. With a dedicated payroll management system, organizations can now operate seamlessly and be more effective. When a payroll method amalgamates HR processes, it turns out a great success. Plus, it helps with providing multiple factors, such as monitoring performance, on-boarding, benefits, and so much more.
To Sum Up
It is evident that technology is revolutionizing the way business is conducted. Implementing a new technology is challenging, but once you select the right payroll management solution, you will begin to see the benefits and value it brings to your company and employees.