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Payroll transformation is already well underway. From the forgotten back-office function it used to be, payroll is moving out of the shadows and becoming more and more strategic.
Payroll data is playing an increasingly important role in informing business decisions. Payroll automation reduces the need for manual intervention in payroll and frees up time for payroll managers to take on the role of consultants to give payroll-related advice to managers and business leaders.
With the ongoing changes, businesses need to future-proof their payroll systems to stay ahead of the curve. But what trends are shaping the future of payroll? And how should businesses structure and organize their payroll teams and processes to prepare for what’s ahead?
There are several trends that experts predict to have an impact on the future of payroll. They include general trends that are shaping the world of work and advances in technology, such as automation and artificial intelligence. Here are some payroll trends to look out for:
Real-time payroll processing: Real-time payroll processing is becoming increasingly relevant to organizations. Having access to payroll results in real time enables data-informed decision-making on a whole new level.
On-demand pay: On-demand pay is a payment innovation that allows businesses to give their employees access to the share of their wages which they have already earned for the ongoing pay period.
Cloud-based payroll: From data storage to backups to processing, more and more businesses are moving their payroll to the cloud.
Payroll integrations: Integrating payroll and HR systems allows businesses to create seamless workflows in their workforce management.
Globalization: Payroll needs to adjust to the new reality that is working with globally distributed teams. This means processing payroll in different jurisdictions while respecting local regulations. Therefore, payroll should be considered early on in any expansion plans.
Gig economy: Due to the rise of the gig economy, it’s not just employees on the payroll anymore. Instead, payroll systems need to be able to account for other employment types such as freelancers and independent contractors as well.
The impact that COVID-19 had on global payroll was that it revealed some major inefficiencies and problems in international payroll operations, including a lack of remote accessibility, transparency and visibility, and low levels of standardization and flexibility. This revelation triggered some major changes in the payroll industry. The most important change being a growing need to make payroll more resilient, transparent, and operational.
A future-proof payroll system for global teams should fulfill the following criteria:
Use of an advanced payroll software,
Standardized, streamlined payroll processes,
Integration of the payroll system with other business functions and processes,
System updates to reflect the latest payroll and employment law changes,
Implementation of payroll audit processes,
Standardized global payroll reporting,
High level of payroll automation,
Focus on employee experience (i. e. employee self-service functions),
Increased level of payroll security and data protection,
Resilience to disruptions and crises,
Payroll data mining for detailed insights into global payroll costs,
Efficient payroll vendor management, and
Advanced global payroll maturity.
In order to future-proof their global payroll, business leaders need to make several decisions regarding their payroll operations and processes. These decisions include staff, operational , and payroll outsourcing decisions.
There are different approaches to running a multi-country payroll, primarily in-house or outsourced, centralized or decentralized, and hybrid models that combine in-house payroll processing and payroll outsourcing. The first step on the way to a future-proof payroll therefore consists in choosing the right payroll delivery model. Aspects to consider in the decision-making process include:
Who will manage in-house payroll operations? HR, accounting, or a completely separate payroll function?
Who is in charge of payroll audits and who can be held accountable for payroll decisions and errors?
How does one ensure knowledge transfer occurs in payroll when employees leave the company?
How should one organize handover planning in payroll when key employees retire?
What skills will be crucial for payroll teams in the future and which L&D opportunities need to be created so that payroll professionals can learn the necessary skills?
Which parts of payroll should be kept in-house? Which ones should be outsourced?
How does a company find the right payroll service provider?
How should a company manage several in-country payroll providers?
Software tools and smart technologies are playing an increasingly important role in many areas of business. When choosing a future-proof payroll software, businesses should keep in mind that:
Cloud-based payroll solutions offer several major advantages compared to self-hosted software for payroll, including higher payroll security and data protection standards.
There is a difference between global payroll aggregators and payroll consolidation platforms. Payroll consolidation platforms offer a greater level of flexibility and standardization and an advanced technology platform to consolidate global payroll data.
There are many parts of payroll that can be automated. Businesses that leverage technology to automate repetitive payroll tasks not only reduce the risk of payroll errors, but also they free up resources to focus on making payroll more strategic.
Global payroll reporting is still a headache for many businesses, but it doesn’t have to be. Payroll consolidation helps businesses put together all their global payroll data, which can then be transformed into detailed data insights with the help of payroll analytics tools.
A high level of integration between payroll and related business functions, such as HR or accounting enables seamless workflows, avoids double data entry and prevents data inconsistencies.
Payroll and employee experience are intertwined. Timeliness and accuracy of salary payments are important contributors towards employees’ financial security and are therefore crucial for creating a positive employee experience. Other important considerations in this context include:
Will employees have the possibility to update their personal information online?
Would it be possible to submit queries regarding payroll via the central payroll system?
Would it be possible for employees to access documents, such as payslips, online?
Will there be a diversification of salary payment methods or options for on-demand pay?
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Lano’s payroll consolidation platform is designed to simplify global payroll operations by streamlining payroll processes across different entities and geographies. Instead of running and overseeing different local payrolls individually, they can all be managed centrally via one single platform.
Automated data flows between systems allow for a consolidated view of global payroll data, while advanced payroll analytics tools deliver detailed reports on global workforce costs and more. With Lano’s integrated global payment options, slow and expensive bank transfers to pay global teams are a thing of the past. Book a demo with one of our experts to learn more.
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