The Future of Payroll is Fintech

Originally featured in the Business Reporter: Future of Work 2021 report.

Society has moved to a more on-demand lifestyle. We look for instant gratification in all areas of our lives and tech-savvy consumers expect immediate access to entertainment, news and financial services at the click of a button.

According to a recent Prosper Insights & Analytics survey, over two-thirds of Americans now use mobile payment apps. 

Advances in consumer technology have also led people to expect the same type of interaction with technology at work as they enjoy in their personal lives. Digital transformation in business has happened. 

And now traditional functions like Payroll are embracing the on-demand economy and turning to FinTech to revolutionize how companies pay their employees. In Payroll, advances in software have made consolidation, standardisation and regulatory compliance easier to achieve for payroll practitioners. At the same time, improvements in technology and money movement networks are making it easier for companies to cater to new employee preferences.

Employees can now access a ubiquitous mobile app that combines new payment methods to give them on-demand access to what’s rightly theirs: earned wages.

Consumer FinTech and on-demand pay 

It’s unusual for most businesses to run payroll more than once or twice a month. But recent FinTech developments have opened up new possibilities for companies to pay their employees on-demand. Employers can offer on-demand pay through a cloud-based money movement solution made accessible to employees as a downloadable mobile app. Employees log in at any time, see how much they’ve earned and draw down their pay when they need it. It provides the freedom to manage financial commitments as needed throughout the month. 

Also referred to as earned wage access (EWA) or flexible pay, the service is offered by several solutions specific to a geographical region. But CloudPay recently launched the first global solution for international multi-national companies looking to pay offer to their employees around the world: CloudPay NOW. 

According to EY research in 2020, 80 per cent of individuals indicated they would use a form of on-demand pay. And it’s not just a benefit sought by lower earners or individuals of lesser financial means either. It’s about timing and cash flow.

With $756 billion in outstanding credit card debt in the US and £72 billion in the UK, credit cards remain the most common form of debt. Earlier So earlier access to earned wages and financial wellbeing tools can address misaligned cash flow and potentially reduce the significant cost of credit card debt for individuals. 

The CloudPay NOW app provides easily accessible financial wellbeing tools and information for use while financial decisions are being made. 

For businesses, offering EWA as part of their benefits package is an opportunity to provide a high-value benefit for relatively low cost. become an employer of choice. Not only does it EWA can demonstrate a company’s commitment to the wellbeing of its workforce, but it can also help employers stand out from the crowd in the competition for talent and retaining their valued employees talent retention. 

Accelerated digital payment methods 

Standard payroll payment cycles are typically three days long. But it’s possible to reduce this process to seconds by deploying new card payment methods. 

Virtually instantaneous payments to debit and credit cards and e-wallets are made through card rails rather than the traditional banking rails, which take much longer to process. 

Businesses can use a single interface to access multiple payment solutions and issue payments to employees, statutory bodies and third parties in hundreds of different currencies around the world.  

This virtual world of money movement provides employees a choice of payment types that suit them, and gives employers back-up payment options and a potential reduction in costs. 

The added speed from card rails means capital is retained for longer. Payment cycle time is reduced, security is strengthened, and it’s a fast solution for errors. 

Global business needs a global payroll system 

Global payroll systems have transitioned from local vendor experts providing managed services to aggregator models using middleware and single contracts. But global business really needs one consolidated system of unified tools, workflows, data and people, all using a single source of truth. 

Such a unified and standardised system is made possible with the deployment of a global payroll and payments software platform used by all internal and external parties involved in the payroll.  

Managing global payroll effectively requires real-time visibility into what’s happening across the entire payroll function. Separated data sources slow down the reporting process and leave analysis wide open for errors. 

Once the global payroll system is consolidated into a single platform, next-generation analytics will visualise and interrogate the data in context to deliver tangible business insights that optimise payroll process, deliver workforce analytics and inform hiring decisions and board-room level conversations. 

This unified technology approach creates the gold standard in terms of managing global complexity, security and compliance. 

Payroll automation and software integrations 

Data validation is clearly the bedrock of any payroll system: validating data inputs to calculate pay and data outputs to process the resulting payments. 

AI-driven robotic data validation can automate up to 85 per cent of data validation checks. It throws up repeatable exceptions and differences in data inputs and outputs and works to customised payroll controls. Exceptions are therefore flagged up for swift resolution. Software integration is a critical success factor for any business transformation. Integrations between Human Capital Management (HCM), Enterprise Resource Planning (ERP) systems and the payroll platform provide business efficiencies and a superior user experience for employees, such as allowing them to access payslips alongside other key information in a single place. 

EWA is the most dramatic development in payroll to date. Driven by consumer demand and technology, it offers a compelling economic case for employers and flexibility and peace of mind for employees. It can be deployed as an addition to an existing payroll system and does not create an additional administrative burden. The risk and investment are low and the benefits to progressive employers and employees are real in terms of employee wellbeing and retention. 

FinTech has ushered in a new era for payroll. At CloudPay we think of it as the modern pay experience for employers and employees. Automating and unifying the old manual processes, introducing faster, more flexible payment methods and inventing on-demand pay have made the future of payroll available to us today. 

Industry View from Paul Bartlett  

Paul Bartlett is CEO of  CloudPay, a global payroll, payments and earned wage access solution for multinational organizations. Bartlett has deep experience helping companies improve the efficiency and scalability of their operations using technology and services. As CEO, Bartlett spearheads corporate initiatives focused on automating global pay processes to improve employee experiences. 


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