The American Payroll Association's study indicates that over a third of businesses use a payroll system ten years or older, often using spreadsheets, software, time cards, and manual processes. These practices are labor-intensive, inefficient, and error-prone, and are not keeping up with evolving technology and employee expectations. Employers must adapt to these changes to improve efficiency and meet employee expectations. Fastway Taxes and Payroll, known for exceptional Payroll business services in Ontario, brings a useful blog forecasting the payroll future in 2024. If you are looking around for affordable tax preparation services, you have landed in the right place.
Fintech Empowering Flexible Pay
FinTech solutions are transforming employee pay and payroll practices. Employees are increasingly asking employers for Earned Wage Access (EWA) and daily pay options, with two-thirds of employees at companies that don't offer EWA interested in participating. Payroll trends also include offering same-day pay, particularly in entry-level jobs, to attract employees.
Technology Advancements
Only 54% of companies use cloud-based payroll processing technology, with manual practices, in-house solutions, and desktop software still prevalent. Cloud payroll systems offer benefits like streamlining processing, self-service options, remote connectivity, and scalability. Outsourcing payroll software offers advantages like maintenance, updates, and compliance with laws. Organizations are also considering integrating payroll systems into a consolidated Human Resources Information System (HRIS) to manage employee experience, ensure data sync, and make data-driven decisions.
Remote /Hybrid Work Setting
The rise of remote and hybrid workforces has heightened the complexity of payroll management, particularly in multi-jurisdictional situations with varying labor laws, tax structures, and reporting obligations. This can lead to significant legal risks for companies that fail to account for these jurisdictional differences.
AI Automation
Robotic process automation (RPA) is increasingly playing a significant role in payroll processing, freeing HR and accounting teams to focus on higher-level tasks and reducing data entry errors. AI, such as Chatbot, is also being used in payroll to provide self-service options for employees, and some companies have deployed AI in their benefits portals to evaluate employee data and recommend customized plans.
Sustainability
Future employees are increasingly seeking companies that prioritize sustainability, with two-thirds of college students indicating they would prefer sustainable jobs. Green payroll practices, such as paperless systems, digital clock-in/clock-out, online portals, and direct deposit, are becoming standard, reducing paper waste and simplifying recordkeeping.
Financial Well-Being
A PwC survey found that 57% of employees believe finances are the primary cause of stress, with concerns about job security, inflation, and wages impacting performance and well-being. Despite rising salaries, nearly half of employees feel their compensation doesn't match the cost of living. Employers can alleviate stress by offering financial wellness programs to help employees understand their payroll and benefits options.
Data Security
Cybercrime continues to rise, with record numbers of attacks in 2022 and 2023 targeting employee payroll records and financial information. A Russian criminal group recently targeted over 100 organizations, demanding ransoms. Businesses should educate employees about potential scams, as 82% of data breaches involve human error. Regular training on phishing emails, business email compromise, and cybersecurity is crucial.
Final Words
Employers must regularly assess payroll trends to ensure they meet employee needs and improve workflow efficiency. This involves aligning payroll strategies with modern practices and employee expectations. The start of the New Year is an ideal time to reassess payroll management, evaluate trends, and determine future operations. This will help businesses grow and meet the needs of their workforce.
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