Salaries represent a considerable chunk of business costs. Small and mid-market companies are particularly sensitive to this expenditure. Yet, they are often less equipped to handle complex payroll processes and don’t see the benefits of nuanced payroll administration.
“There’s much more payroll can offer than just paying employees,” says Heinrich Swanepoel, Head of Growth at PaySpace by Deel. “A well-managed payroll improves your standing with employees because they are paid accurately and they can access important payroll information such as payslips. It also helps the business manage costs, spot payroll fraud, and avoid problems with the law or tax authorities.”
How can they borrow the shoulders of giants and drive a Ferrari on a budget? Cloud-native payroll platforms are making it happen.
Common payroll challenges
All businesses share common payroll best practices. Some of these weighs heavily on resource-constrained SMEs, including:
Classifying remuneration profiles: Employees can be 9-to-5 workers, shift workers, temporary staff, and contractors. Each has different remuneration profiles affecting payroll calculations and legal requirements. These include medical aid and retirement deductions, leave allocation, and business benefits. Other considerations include overtime, commissions, loans, and garnishee orders.
Providing employees with payroll information: Payrolls help define an employee’s relationship with their employers. Employees also rely on payroll to manage their leave, bonuses, overtime, and medical credits. They use payslips when they apply for loans or open new accounts. Naturally, they can become frustrated when they struggle to get relevant payroll information from the business.
Managing different tax requirements: Business owners must comply with several payroll-related laws. In South Africa, these include the Tax Act, the Basic Conditions of Employment App, and the Unemployment Insurance Act. Keeping up with legal requirements takes time and knowledge, and becomes considerably more complicated when you hire people in different countries.
Keeping on top of reporting and fraud: Payroll reports can highlight overspending and theft, such as ghost employees and timesheet fraud. Regularly studying reports also helps avoid payroll silos that even management and finance teams struggle to comprehend.
How does payroll technology help?
Each of these challenges can become powerful automated processes and services. Yet most payroll software lacks the suitable features, templates, cost models, and automation features to achieve these goals.
“A lot of payroll software doesn’t amount to much more than running a spreadsheet,” says Swanepoel. “You can create profiles, make basic calculations, and connect to data sources. But that’s not saving people time or expanding payroll functions to the wider business. This is why payroll platforms are replacing payroll software. They can do all the things traditional software delivers and add a lot more.”
Cloud-native payroll platforms enable businesses to control those challenges. They manage remuneration profiles dynamically without bloating administration, and they offer self-service features so employees can conveniently source payslips or apply for leave without involving someone else.
One of their best features is automated legislative updates: the platform provider pushes all legal changes into the platform, making them immediately available to its users. Payroll platforms also radically improve reporting features, including custom dashboards for different departments and ad-hoc report generation that doesn’t need to involve payroll staff.
SMEs benefit considerably from the affordability and flexibility of payroll platforms. They can subscribe to the platform for much less than purchasing the software, and access it via an internet connection, negating expensive hardware used to run payroll software. They can even run payroll services on their phones. The leading cloud-native payroll platforms also provide automation features and templates to simplify process improvements.
“Cloud-native payroll platforms offer benefits to any business, but especially to small and mid-sized companies because they are versatile and their multi-tenant model makes them affordable. SMEs aren’t forced to sweat one piece of software that costs them a fortune, and they don’t have to pay for extensive consultation or payroll services to build automated payroll processes. They gain much more control over their payroll practices.”
In the past, only large enterprises had the resources and tenacity to manage payrolls in detail, and even they ran into complex barriers. Cloud-native payroll platforms are collapsing those barriers, and SMEs use those advantages without the risks of long-term software capital expenditure. They can leverage the advantages of big companies while driving a Ferrari on a budget. SMEs can be payroll’s biggest winners, enjoying the power of modern payroll best practices without the hefty complexity or costs.
