Payroll, which includes employees and their salaries or wages, can be defined as the amount of money a company pays its workers. However, the process is not that simple. Human resource details like employee benefits, salaries and records all fall under payroll, and organizing each employee's file can be difficult.
But as technology advances, payroll is becoming a more seamless process. This is great news for small businesses that struggle to manage human resources. Here's what to expect in payroll's future.
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With freelance work on the rise, many employees expect real-time reimbursements for projects. Rather than waiting for the typical bimonthly paycheck, they're demanding instant payments. However, this trend isn’t limited to outsourced talent.
"Instant payments are becoming more and more popular as an option for hourly workers – getting paid immediately, or nearly immediately, after they've worked a shift," said Ravi Dehar, head of growth at Homebase.
This can be achieved through mobile payments, using apps like PayPal and Venmo, which are increasingly popular. However, there are downsides to this arrangement, especially when calculating taxes and maintaining records of paychecks and cash flow. [Interested in a payroll service for your small business? Check out our best picks.]
Cloud computing, which allows you to access your data on any device in any location with an internet connection, includes various cloud services, such as storage, backup, hosting and software as a service (SaaS). According to Forbes, 83 percent of enterprise workloads will be cloud-based by 2020.
"There are payroll companies that already operate in the cloud, and most likely that will only grow," said Dehar. "Heading to a bank branch to run payroll will quickly become a thing of the past for most business owners, if it hasn't already."
There are many benefits of cloud computing, especially for small businesses with limited resources. Two advantages in particular are cost savings and flexibility, said Angelo Frisina, founder and CEO of Sunlight Media LLC.
"As an organization grows, it can expand its use of cloud services as needed, without extra hardware purchases and with little or no software," he said.
Cloud solutions also include automatic and routine software updates and data backups, and cloud-based payroll software solutions help organizations stay current with tax compliance and other regulations, Frisina added. This is a trend that every small business should adopt.
You've surely heard the theory that robots will someday take over the world. While that conclusion is a bit far-fetched, the idea that machines might soon replace human workers is becoming more plausible – and artificial intelligence is to blame.
AI, while not a new field of study, is now seeping into businesses of all sorts and affecting various departments, including payroll.
"We're seeing technology in general helping business owners save time when running payroll," said Dehar. "On Homebase, for example, business owners can get a text when someone missed a clock-out – and employees will also get notified via Homebase Messenger, along with the option to reply back with their correct clock-in time. Reducing timecard errors is a huge timesaver."
According to Frisina, AI can also classify employees to ensure they're in the correct tax brackets. If any issues arise, HR departments can then use chatbots to help employees with non-urgent requests. If an issue is urgent, those bots will send them along to human administrators, said Frisina.
A company's human resource management system (HRMS) impacts individual and organizational effectiveness, Frisina said. That's why it's crucial for HR managers to ensure all data is protected and classified, yet can be easily accessed for reference.
"As labor laws get more complex, it's important for business owners to keep an accurate set of data around payroll," added Dehar. "So, in addition to reducing payroll errors, you're also storing historical payroll data securely in the cloud. Likewise, having your different systems talk to each other – like your scheduling app, your timeclock and your payroll provider – reduces errors and saves you time."
When all payroll data is integrated, it's much easier to manage. Invest in the right payroll service or software to experience a more seamless experience.