The pandemic has led many companies to change their business strategies. For instance, most staff are working from home and businesses are constantly on their toes to keep themselves afloat during the COVID-19 crisis. Certain important functions, including payroll processing, need to be updated as a result of these new social and economic challenges. After all, payroll isn’t just about doling out employee paychecks; it also plays a vital role in your business’s success.
If you want your business to thrive through hard times, it’s imperative that you move with the trends and adapt to changes to your payroll systems. Here are some payroll management trends for 2021 that you can begin to prepare for now.
Rapid technological advances and the complexities of the pandemic have made it necessary for businesses to change how they function. This includes payroll processing.
Here, we highlight tomorrow’s payroll management trends so you can prepare your business today.
According to a recent report by Allied Market Research, the cloud-based payroll processing software market is expected to reach $10.33 billion by 2023. This demand for cloud-based payroll software will likely continue surging during the COVID-19 crisis as it enables employees to access data remotely. Since working from home has become the new normal, using cloud technology becomes especially useful in managing payroll from anywhere on any device. It also allows you to easily scale your business while protecting it from computer hacking and other cybercrimes to ensure your data’s safety.
Artificial intelligence (AI) has become an integral part of payroll management by making work much easier. It can automatically classify employees, ensure they’re in the correct tax bracket, calculate taxes, and generate reports that are otherwise prone to errors and produced more slowly when done manually. Integration of AI-based chatbots plays a significant role in cutting unnecessary expenses, saving time, shaping your budget, and contributing to your business’s success and growth.
HR management and payroll systems are separate but interlinked sectors which when combined can streamline the management of employee data.
For example, HR software helps in functions like time tracking, scheduling and leaves. This data can be easily shared across systems if integrated with your payroll software. This reduces under- or overpayment and more accurately tracks employee work hours. When all data is combined, you can identify relevant information to generate actionable insights.
Pay transparency allows your organization’s employee compensation figures to be visible to other people (internally, externally or both).
Disclosing your company’s pay structure has many benefits. These include building employee trust and loyalty, reducing pay gaps, and increasing employee retention. It also promotes equality as employees will know why they didn’t get that raise they asked for and upper management will have a data-driven rationale for pay decisions.
New methods of payroll distribution are expected to trend in 2021. Nowadays, employees want flexible payment options like being paid as soon as they leave work. Millennial employees prefer to get paid in real time rather than waiting for direct deposits or weekly/biweekly payments.
Also, as more and more employees use digital wallets instead of carrying cash or accessing bank accounts, you may consider incorporating various electronic delivery methods to distribute payroll. Businesses should be prepared to embrace real-time payroll software that offers 24/7 instant interbank electronic fund transfers. These can be accessed via many channels including laptops, smartphones, and digital wallets.
To increase productivity, you need to keep your employees engaged, motivated and not worried about their financial wellbeing.
That’s why payroll experts are predicting that many forward-thinking businesses will incorporate a financial wellness program into their payroll systems in 2021. This includes financial counselling to help employees plan their retirement and effectively allocate their money. This will ensure that they’re more focused at work and spend less time stressing over financial matters.
Globalization and the pandemic-inspired increase in working from home have given rise to many freelance and gig workers. In fact, they now play a major role in the operations and output of many businesses.
Payroll processes should as a result be updated to handle a diverse and dynamic workforce of full-time employees and third-party workers. This includes making adjustments to deal with compliance and taxation issues to handle situations where freelancers and gig workers come and go or get hired full-time.
The way we conduct business is changing and so is payroll management. Automation, AI integration, real-time payroll distribution and pay transparency can help businesses ensure smooth payroll operations, develop meaningful employee relationships and reduce compliance errors. To reap the benefits of technological advances and grow your business by implementing the latest payroll trends, contact a payroll expert or outsource your payroll processing.
The Virtuous Bookkeeping explores ways for entrepreneurs to enjoy independence and better run their business. Join over 10,000 subscribers and get our best articles delivered via email.