AAB: hi-tech payroll solutions to keep staff and HMRC onside
Rapidly advancing digital technology means that organisations are increasingly moving away from enterprise resource planning-based systems to cloud-based solutions. And both application programming interface (API) and artificial intelligence (AI) technology are more commonly being used to bridge the gap when systems do not automatically integrate.
Having a coherent technology strategy is critical to deal with the increased complexity of payroll operations amid increased compliance in the regulatory environment.
The rise of social media, smart devices and cloud computing has opened up new avenues. At the same time, employee demographics are changing with increased expectations and empowerment.Technology and social media are making employees better informed, more connected and more vocal. Get their payroll wrong and the wider world will very quickly get to know about it via social media.
For many organisations their payroll system – or interface with an outsourced provider’s system – remains separate from their human resources (HR) and finance systems, which drive payroll inputs and manage the outputs.
Very few organisations are operating cloud-based payroll systems that are interlinked with their other cloud platforms, or have API or AI to bridge the gap. Consequently, confidential data is sometimes passed via e-mail or other non-secure data exchanges.
With an increasing number of payroll systems and payroll bureau available, organisations are faced with difficult decision of selecting the right fit for their business. Making the right decision based on the organisation’s risk appetite and an understanding of the broader IT and business strategy is vital when selecting a payroll system.
Having good data is increasingly important to ensure good governance and control. At the same time, your staff expect you to act responsibly with their personal information and to respect their right to privacy. Failure to comply with the law can lead to serious legal and financial consequences and significant operational challenges – business disruption, financial loss and reputational damage.
Questions for businesses
Digital technology trends and higher expectations have led to features such as payslips being sent to mobile devices, real-time reporting, the production of meaningful information from more data, and payroll communicating with other systems, transforming the payroll landscape.
Managers and business owners looking to re-evaluate their payroll system should begin by asking:
- Does our current payroll system or outsourced bureau fit into our overall technology strategy?
- What interface do we have for the payroll process, and how do the outputs link to our HR and finance systems?
- Have we analysed the cost of running the global payroll systems and number of vendors?
- Are we confident our outsource provider can deliver an end-to-end technology-led payroll solution?
- Is our payroll data secure and have we performed penetration testing or tested compliance with ISO 27001 (the international standard on how to manage information security)?
- How can we take advantage of technology for a more resilient and efficient payroll process?
The expert view
The objective for payroll has always been simple: to pay employees accurately and on time. Payroll has historically been seen as a low-risk function – generally automated or outsourced – where issues rarely trouble the higher levels of management.
To that extent, it probably has not been given a great deal of time or attention by management. That needs to change because employment taxes are now the largest source of government income, globally. Tax authorities increasingly see the payroll function as their primary tax collection agent, transferring an ever greater burden of responsibility on to employers, particularly when set against the backdrop of continuous legislative and regulatory changes.
It is paramount for an organisation’s payroll function to operate efficiently and to meet all legislative requirements. Embracing technology will help employers keep onside with their employees and meet the continuing changes handed down by HMRC.
Stuart Law is Payroll Director at Anderson Anderson & Brown