FinTechPayments TechnologyStrategic business management systems drive efficiencies

Strategic business management systems drive efficiencies

We discuss why payroll systems are a key element of an organisation's automation drive.

There’s no getting away from the fact that automation is high on the agenda of organisations of all types. The appeal of gaining operational efficiency and reducing costs is clearly high at a time of wider economic uncertainty.

Payroll is no exception. Seemingly simple and obvious, payroll systems are not often thought of until they go wrong – yet it’s vital that a company’s payroll department is as efficient and successful as possible. Keeping track of employee pay, bonuses, pension payments and tax contributions, while making payments on a timely basis, are essential to keeping up staff morale and maintaining efficient business operations.

Within the business environment, evaluating payroll management processes also involves examining other workstreams surrounding payments. For example, businesses may look to integrate performance management, time tracking, holidays, together with the payroll data. Solutions also need to be flexible and scalable – in line with other technologies such as treasury management systems.

At a minimum, HMRC requirements also need to be considered. Records of payslips, pension contributions, taxable benefits, and national insurance payments may need to be generated on regular basis and often upon request. Ensuring that payroll is compliant with PAYE is also an imperative. HMRC now requires payroll information to be submitted in real time rather than in arrears – penalties apply for late filings with interest capitalisation if they are not resolved.

Crucially – and important from a treasury perspective – trends in payment technology have also had a strong influence in the sector. APIs, payment aggregators, and real-time accounting have initiated the growth from payroll only to organisational management systems. Payroll software, much like any other enterprise management software solution, has been upgraded to cloud-based computing. With the shift to new technology, payroll has moved from a back-office function to a company-wide services provider.

Partnerships reshape the market

As we recently reported on The Global Treasurer, digital payment services provider Modulr has recently announced a feature partnership with Sage, a business software industry leader.

“Modulr brings significant industry expertise that offers us the opportunity to expand the capabilities of our solution with new functionality and geographies, together with specific support for the development of our partner channels,” explained Seamus Smith, Executive Vice President Global Payments & Banking at Sage, of the new alliance.

Called Sage Salary and Supplier Payments, the new offering will give SMEs the ability to take charge of payments and the opportunity to move away from traditional banks.

Myles Stephenson, Chief Executive of Modulr, commented: “Our Payments as a Service API platform enables our partners to quickly and easily integrate new payment services into their core products. Our innovative partnership with Sage will enable organisations to address the significant burden created by existing inefficient payment processes. Our fully integrated service provides a fast, easy and reliable alternative to processing payments via traditional business and corporate banking.”

Sage Salary and Supplier Payments will be offered to Sage customers, who are already using their payroll, HR, account, or payment services.

Tech innovation brings opportunities

The use of Excel has long plagued companies large and small – the infidelity of macros, version control, and manual inputs makes it hazardous to rely on for sensitive processes.

“Today, many accountants, payroll bureaus and small business owners manage payments to employees and suppliers. This process can be highly manual and involve insecure file transfers between different software solutions and systems. Accountants and payroll bureaus that manage this process on behalf of several clients and across multiple bank accounts find this manually intensive process time-consuming and error prone,” said Stephenson.

The problem is particularly acute for third parties receiving payroll instructions. For Modulr, the opportunity to bring new technology to the market is ripe.

“There was a gap in the market, and that was a lack of automation. The fact that the end customer or the accountancy firm has to deal with that manual process – which is inefficient and time-consuming – could lead to data and security issues, and also not being able to reconcile by easily getting back the data from the bank to the accounting platform or the payroll platform,” said Stephenson, when commenting on Modulr’s market proposition.

SWIFT integration

Previously reserved for the ‘big boys’ of banking and finance, nimble FinTech’s have come onto the scene to take advantage of existing payment architecture. Presenting new opportunities in enterprise payments, Open Banking reforms and acceptance of APIs across traditional networks like SWIFT have allowed companies greater choice in payment providers, aggregation, and analysis.

Modulr’s technology opens new avenues for organisations – especially SMEs. The API ‘sandbox’ allows developers to tailor software specifically to needs, empowering Modulr clients to make changes directly or harmonise with existing software. A must for firms in finance, STP (“straight-through-processing”) is the standard when making payments. Modulr can automate payments and is a member of CHAPS, Bacs, Faster, and SEPA payment schemes. Further integrating into existing payment networks, Modulr is also adding SWIFT and Mastercard payment systems.

Standalone or partnership?

Standalone payroll management systems still abound despite the market trend in aggregating payroll with enterprise management. Many of these payroll software system providers cater to exact standards prescribed by regulators.

12Cloud Payroll offers the core payroll management services to most SMEs. Key features include streamlining the leaver/joiner process, holidays, deductions (i.e. student loans), and irregular pay (i.e. contractors, directors). For payroll and HR managers, 12Cloud Payroll offers data extraction and analysis. Online access to payslips and historic data is available to employees and is a meaningful improvement from paper-based services.

Accounting firm BDO also provides software to fulfil business needs. BDO’s P11D Enterprise software provides specific outputs for employee cash payments, expenses and benefits. Tailored for the HMRC inputs, the software provides the reporting necessary for HMRC compliance. P11D also automates tasks to improve efficiency and minimise manual errors in data processing.

Of the same payroll software name, Thomson Reuters’ P11D Enterprise offers HMRC compliant services, helping companies make the leap from manual Excel spreadsheets to automated payslip generation sealed with HMRC approval. Basic HR functionality is also included – users can select standardise benefits from a predetermined list to be assessed.

PayFit also combines payroll services and basic HR functionality such as tracking holidays, leave, expenses, time tracking and staff workflow. Managers can monitor team working hours and manage holidays, making the allocation of time and resources more efficient. The European start-up endeavours also to make HR and payroll easier by storing employee information (work certificates etc.).

When considering software providers, companies must also consider the data security provided by the platform and how it integrates with their internal data protection policies and procedures. This is especially important now, following the implementation of GDPR (EU General Data Protection Regulation).

Payment control is still the cornerstone of payroll management systems

“Being able to pay employees and suppliers on time is an essential part of business,” said Sage’s Smith.

Taking stock of business necessities and growth plans, in addition to the availability of new technologies, is key when considering the type of payroll system required. While many firms still operate payroll software systems in a silo, organisations looking to optimise processes can expect automation, transparency, and data analysis.

Commenting on technology and Sage’s capabilities, Smith further adds: “Customers and accountants will further benefit from real-time visibility of payments, seamless reconciliation of payment data into Sage’s Accounting and Payroll products and role-based access controls, meaning that they can track and manage a full audit trail of activity pertaining to incoming and outgoing payments, which will give them full control of a crucial part of their business.”

Unique partnerships have potential to prevail

Clearly, demands from organisations can quickly outstrip services provided by stand-alone providers. Integrated HR and payroll software and looking across the entire company enterprise, becomes increasingly important for larger companies.

Modulr’s payment technology when combined with Sage’s business enterprise systems is an attractive offering housed under a single platform. Stephenson notes that “Sage Salary and Supplier Payments, powered by Modulr, means Sage customers can now open as many payment accounts as they want. They can also make payments whenever they want, 24/7, 365 days of the year. There’s no longer a need to switch between different software applications to get the job done.”

“By enabling our customers and accountant partners to automate vital financial processes directly from our products, we can exceed their expectations. This will help them to save time on administrative processes, take control of the flow of money through the software, improve data security and reduce costs,” says Smith.

Strategic partnerships, like the one between Modulr and Sage, stand to capture more market share together by shaping innovation in the payroll space, while crucially supporting SMEs. Looking forward, the flexibility – while improving automation – may indeed edge out traditional suppliers of payroll and HR software.

Related Articles

Banks risk losing US$280bn of payments revenue as digital payments and competition from non-banks grows

Banking Banks risk losing US$280bn of payments revenue as digital payments and competition from non-banks grows

7h Jay Ashar
Removing friction in cross-border payments

Payments Removing friction in cross-border payments

3w Olivier Miet and Didier Balland
EBA responds to issues raised by EBA API Working Group

Banking EBA responds to issues raised by EBA API Working Group

4w Jay Ashar
eBAM: the foundation for a successful finance team

Corporate to Bank Relationships eBAM: the foundation for a successful finance team

4w Austin Clark
SWIFT: The reality of real-time payment development

Payments SWIFT: The reality of real-time payment development

1m Austin Clark
Rio Tinto and Cargill pioneer industry’s first fully integrated paperless trade

Payments Technology Rio Tinto and Cargill pioneer industry’s first fully integrated paperless trade

1m Tom Lemmon
Commerzbank and LBBW execute landmark trade finance transaction via third party

Blockchain Commerzbank and LBBW execute landmark trade finance transaction via third party

1m Tom Lemmon
Case study: Using technology to remove the payments compliance headache at Johnson Electric

Case Studies Case study: Using technology to remove the payments compliance headache at Johnson Electric

1m Austin Clark

Whitepapers & Resources

Are You Ready to Implement your GRC Solution?

Are You Ready to Implement your GRC Solution?

5m
TIS Sanction Screening Survey Report

Payments TIS Sanction Screening Survey Report

2m
The Challenges of Regulatory Reporting

Brexit The Challenges of Regulatory Reporting

8m
Mitigating Costs and Exposure - A Multilateral Netting White Paper

Mitigating Costs and Exposure - A Multilateral Netting White Paper

7m