Running payroll is a very time-consuming task. On average, a small business can spend at least 5 hours every month on it, translating into days of effort for enterprises.
Payroll places significant pressure on companies for two reasons: it’s time-specific because you don’t want to pay staff late, and it’s very routine, meaning you more or less follow the same processes and tasks every payroll cycle.
It’s a vital business function yet also a time-draining and mundane activity – the type of task few want to do. Many businesses would prefer a much more streamlined experience and ideally outsource payroll to a third party, such as their accounting firm.
But it’s not easy to make this happen, explains Heinrich Swanepoel, PaySpace’s Africa business development manager.
“Many accountants want to do payroll on behalf of their clients,” he says. “But traditionally, it’s done by somebody that just focuses on payroll because they have a lot of knowledge around payroll and its processes.
“Traditional payroll is very manual, very paper-intensive, and gathers a lot of information from different parties. It’s not an easy thing to manage, and for many accountants, that is still too big a burden.
“But new types of software are changing the situation.”
Why accountants want payroll
Accountants are a natural fit for payroll. They work closely with company departments and the ear of finance directors and departments, and are always looking for new services to offer their clients. Yet, since payroll is very intensive and laborious, it doesn’t offer much return for effort or ends up being expensive for clients.
Payrolls are not simple. They account for salaries, one of the biggest business costs. They align with other key parts of a company, such as human resources. Payroll systems tend to be very embedded, and companies are reluctant to fiddle with them. Lastly, payroll comes with many compliance and security considerations, not to mention financial crimes such as fraud.
In other words, accountants and auditors would love to run payrolls as a service to their clients, but they are soberly reluctant because of the inherent complexity and risks. Traditional payroll software and its processes do not solve those problems. But that is changing through cloud payroll services.
“We’re doing a lot of research on our auditors and accountants, and we’ve found three common things that they look for,” says Swanepoel. “They want something that they offer as a service to their clients, they want to migrate clients quite easily, and they want simplified compliance and security.”
Cloud payroll platforms match all these needs, as well as several more. It’s a significant change in the market, simultaneously expanding accountants’ revenue options and reducing the regular headaches payroll can cause in companies.
The cloud payroll difference
To understand why cloud payroll systems differ from other payroll software, we should briefly qualify cloud software, specifically software-as-a-service or SaaS.
SaaS refers to software hosted on servers managed by the software developer. Customers pay a subscription fee to access the software via an internet connection, though some SaaS choices offer offline support. On the software, often called a platform, customers can access different functions and services through their subscription, and any new updates to the platform are available to them.
SaaS is a stark departure from traditional software that requires hefty upfront purchase fees, costly licences that expand per user, and distant investment-return horizons. Most companies buy payroll software once and use it for as long as possible, even if it becomes outdated.
Since cloud software is designed to be connected and easy to update, it brings many benefits to the payroll space, says Swanepoel:
“Cloud software integrates with other business software. For example, we integrate with services like Xero, Quickbooks, Acumatica and other modern accounting suites. You can also integrate cloud payroll for HR systems and draw data automatically from different sources.
“The second benefit is compliance and legislation – these are updated by the platform provider so that all customers have up to date legal information and checks. And cloud payroll is more secure because the platform owner runs the servers and security. It’s a much more cost-effective and low-risk choice.”
Since cloud payroll software is a platform, it’s easy to rebrand to a specific company and extend the platform’s services to customers, such as “reporting, data capture and even employee self-service features.
“And the accountants never have to own or run the software. Instead they subscribe and then charge their clients for their services. And they can offer new features. For example, PaySpace can send payslips to employees directly on WhatsApp, a feature readily available to our customers and their clients.”
Cloud payroll provides accountants and auditors with an enormous additional benefit: continuous payroll. Instead of monthly routine tasks such as making backups, doing rollovers, inputting data and printing reports, accountants can create a stable payroll environment that will continue to operate and only need intervention for any major changes.
Continuous payroll makes payroll processing significantly more streamlined and profitable. Accountants and auditors can also map processes to see who needs to provide input when, thus fully managing the payroll lifecycle across the month – not just at the end.
Why is cloud payroll a big deal? It makes payroll faster, more automated, and easier to manage. It gets rid of those stressful last-mile rushes and establishes coherent processes. Accounting and audit businesses finally have a way to provide payroll to customers without running expensive software or servers, or biting off more than they want to chew.