Cloud payroll: Cost centre or value centre?
Overview of cloud payroll
The level of complexity and change that modern HR teams must deal with is unparalleled, which explains why cloud payroll solutions are becoming more and more popular. Employee expectations are rising in the Great Resignation era. Payroll processes have become increasingly complex due to the widespread use of hybrid and remote work models by most firms. Furthermore, the implications for payroll errors are typically quite high, making accuracy of payroll information more crucial than ever.
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Even little errors might result in humiliation in front of the public and a decline in trust among the top job prospects. The Internal Revenue Service (IRS) fined around $6 billion in 2020 to American employers for miscalculating or failing to make payments. A “name and shame” campaign and lawsuit resulted in millions of dollars in fines and compensation for hundreds of UK employers, including some extremely well-known businesses, in 2021.
The good news is that these difficulties may be transformed into enormous new potential with the help of a contemporary cloud payroll system. In addition to lowering complexity, cloud payroll also aids in risk management and improves security through cloud security. Additionally, it may be crucial to the retention and happiness of employees.
What is payroll software on the cloud?
Payroll solutions were mostly on-premise until recently. They required companies to buy a software license up front, were hosted on internal servers, and needed infrastructure to operate the system, such as IT personnel and recurring maintenance funds.
By handling all software updates and maintenance, your provider handles cloud payroll, sparing you time, money, and the requirement for internal knowledge and infrastructure. The ability to see payroll and benefits papers on a laptop or mobile app is another reason why your employees will like cloud payroll. From remuneration to payroll taxes to compliance assurance, cloud payroll software links and streamlines every step of the process. Additionally, it gives your payroll staff the ability to see and handle payroll from any location with internet connection. And it accomplishes all of this while safeguarding employee and business data from hacks and unauthorized access with the help of strong, integrated cybersecurity measures.
Pay equity and transparency
It has long been considered inappropriate to discuss your coworkers’ salaries. But like with a lot of things after COVID-19, expectations among employees are shifting. They demand openness on the pay of all employees, including the CEO, and information about the firms they work for, including how they invest their money and where their employers stand on social issues. Laws are evolving in tandem with the aspirations of workers. More and more states and cities are passing pay transparency legislation mandating that the compensation range for each position be included in the job description.
Pay fairness and pay transparency must be given top priority. For every dollar earned by males, women only make 82 cents. Additional racial and gender wage disparities also exist, and new ones are popping up. For instance, employees in city-based organizations are increasingly choosing to work remotely from less expensive places rather than in pricey metropolitan centers. This presents a complicated array of HR issues, such as deciding whether and how to modify pay rates to account for location-specific cost of living as well as juggling various taxes and deductions for employees who work in multiple states, provinces, or even other nations. Pay fairness and transparency are advantageous to companies as well as employees. Employee retention rises when employers disclose internal pay systems and make a commitment to pay parity. Additionally, businesses may help initiatives to promote pay fairness and transparency by using data from cloud payroll systems.
Cloud payroll is improving workers’ financial well-being
Companies are searching for methods to obtain a competitive edge. Overall employee wellbeing may be supported by providing financial wellness benefits through a cloud payroll interface, such as help with student loans and personal financial planning services. Indeed, 62% of workers consider an employer’s benefits package when determining whether to apply for a new position, indicating that overall compensation is more than just a pay check and bonus.
Access to financial consultants, digital budgeting, and retirement planning are some of the expanded financial wellness options offered to employees. Alternative payroll solutions, such as on-demand pay, are growing more popular and can contribute to financial health.
Employees who experience financial hardship are less engaged and productive. In the end, performance determines well-being, as Josh Bersin states. It is now a need for business, not a bonus. It needs to be included into management, personnel, and leadership paradigms.
Additional advantages of cloud payroll applications
Cloud payroll solutions increase productivity and save money for companies by reducing hardware, on-premise software, and time-consuming HR and payroll costs. Payroll teams may access strong and responsive tools at their disposal thanks to the access-anywhere interface.
Centralized employee data: All necessary employee information is easily accessible when centralizing employee data using cloud-based payroll software. Additionally, it makes it easier to keep accurate data, giving payroll and HR teams peace of mind about the accuracy of the information they are viewing. Apart from convenience, firms that have expanded via acquisitions place a high priority on centralizing employee data that is accurate and secure in order to satisfy regulatory requirements.
Giving employees the option of on-demand pay: On-demand pay helps employees stay out of debt by enabling them to handle unforeseen costs. Businesses may gain from it as well. Offering on-demand compensation, for instance, might increase a company’s attractiveness to potential workers in markets where employers are in competition with one another for talent. Payroll teams used to require time to manually compute payroll taxes, which is why the typical two-week pay period was instituted. Streaming pay can become a reality by automating that procedure with the help of modern cloud payroll systems.
Enhanced data safety and security: Since cloud payroll providers’ reputations depend on maintaining client data protection, they provide built-in safety and security safeguards as part of their offerings. Payroll suppliers engage in disaster recovery procedures and data and infrastructure security, not only encrypting and backing up client data, because they hold sensitive employee and company information.
Both scalable and customizable: It might take a lot of effort and time to scale payroll software that is installed on-site. As organizations grow or their needs change, cloud payroll software is developed with built-in functionality. Additionally, it can adjust and personalize settings, making it easier to add new jobs, pay contractors, access APIs, and do a lot more.
Simplified compliance: It may be costly to do compliance wrong. Cloud payroll is far more equipped to handle regulatory changes when new laws are established or old ones are amended, guaranteeing that companies keep ahead of important deadlines and stay out of trouble. Additionally, cloud-based payroll has worldwide localization features for businesses with an international presence, ensuring compliance wherever they do business.
Precise reporting and analytics: Payroll that is hosted in the cloud removes the need for human data entry and the associated risk of mistakes. By using real-time data, they may also combine payroll facts and, at the touch of a button, create customized reports. Employing payroll data analytics to identify trends and patterns aids businesses in making more informed decisions.
Flexible and accessible: Employees may access their data at any time and from any location thanks to the cloud. This increases trust and employee engagement while relieving HR of certain administrative duties so they may concentrate on the larger picture. In light of the hybrid nature of employment in the future, this accessibility and flexibility are quite beneficial.