Why a Managed Payments Solution is Essential

Nick Newman | Strategic Initiatives Director, Treasury Services, CloudPay

It’s easy to think that what can feel like a relatively small payment issue – such as pay sent to employees a day late – doesn’t matter too much in the grand scheme of things. But these problems can have a major effect on people’s lives, both inside and outside of work.

A Lending Club report found that 63% of working people in the U.S. have been living from one paycheck to the next over the last year. If anything goes wrong with their payroll, and they don’t receive all the money they expect, when they expect to get it, then the ramifications can be huge.

If payment doesn’t reliably flow into their bank account, they can end up defaulting on rent or mortgage payments, or run into their overdraft and rack up debts. This can have the knock-on effect of increasing the stress of managing their cash flow and finances, which can impact their mental and even physical health.

At a time when many employees all over the world are feeling financial strain due to higher living costs, there really is no room for error from a payroll perspective. This blog highlights why a managed payment solution can ensure businesses achieve accurate, timely, and reliable payroll operations.




The link between payroll and payments

Firstly, it’s important to distinguish the difference between payroll and payments. While payroll represents the processing and admin work around employee pay, including any data around it, payment refers specifically to the act of paying an employee.

They are different functions but are closely intertwined, and the technology deployed to boost the performance of one can have a similar effect on the other. It’s therefore a good idea to look for solutions that unify payroll and payments, so that any inconsistencies between the two that result in stress and difficulty for employees are ironed out.

Why unite payroll and payments in a managed payments solution?

When a managed payroll and payment solution is deployed, the business using it takes on the responsibility of transferring funds, as well as processing payroll correctly. This applies not only to employee pay, but also to statutory and third-party payments, too. The right solution can substantially improve and streamline payroll and payment performance in several key areas, including:

  • Flexibility: integrating payroll and payments gives total freedom in shaping a strategy that works for employers and workforces alike. From a payroll perspective, employers can deploy Earned Wage Access to remove time barriers from employees’ pay; for payments, employers can choose from bank transfers, faster Pay-to-Card services, or even virtual wallets, depending on what best suits employees’ preferences.

  • Employee experience: connected to the previous point, a more flexible payroll and payment function helps employees improve their financial planning and stability. No longer do they have to make their other financial commitments align with a fixed payroll timescale. This can reduce their stress levels, make them more productive at work, and make them feel more valued by their employer.

  • Speed and accuracy: a closer relationship between payroll and payments means that they can operate more smoothly, based on synchronized data and more efficient processes. Combined with fast payment services, this allows payroll to be run and payments to be made far quicker than before, without any compromise in accuracy or increased risk of error.

  • Security and compliance: new technologies such as automated real-time funding and electronic filings help businesses run compliant payroll and payments in multiple territories and currencies simultaneously. Additionally, the ability to use cloud technology means that the security of payroll data and applications can be regularly updated, to protect against new and existing threats alike

  • Data and insights: artificial intelligence and analytics, delivered via the cloud, can help businesses exploit payroll and payment data, and learn new things about their employees. These insights can help them further improve the pay experiences they provide to their employees (for example, offering counseling and support to employees who are struggling financially)

In summary

In global businesses, paying employees around the world has long been a fragmented and difficult task, with a lack of integration embedded into its processes. A more coordinated approach that brings payroll and payments together makes the whole area of payments easier and quicker to administer, more reliable, and better equipped to deliver the experiences that employees need. A single cloud-based managed service is the most effective way of achieving that transformative integration.

CloudPay’s Global Treasury Services can help you get payroll and payment processing right every time, and give employees the pay experiences they’re looking for. Learn about how we can help in more detail here.




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