The future of payroll
What changes in payroll can companies expect and prepare themselves for?
Robotization and automation considerably affect payroll by gradually eliminating manual operations. These changes have a positive effect on business, in particular, on:
- Payroll processes and speed;
- Everyday life and well-being of employees;
- Business as a whole;
- Customer satisfaction with accounting services or external outsourcing company.
Our Finnish colleagues from Accountor described how companies can prepare themselves for changes in payroll as well as possible future problems. This information will help companies prepare for future changes in working conditions and the use of new tools.
We provide a translation of the article which is structured as follows:
For the main part, payroll consists in working with large amounts of information, i.e. collecting, sorting and using data such as, for example, hours worked, tax data, vacation, absence as well as any changes in employment relationships subject to laws and collective agreements.
All this information is collected from various sources within and outside companies and constitutes a payroll system. Information is usually passed from person to person through different processes. For example:
Employees record hourly data in a particular system → their manager approves the recorded information and transfers it to an accountant → the accountant runs payroll.
The most time-consuming part of this process is data management. The complexity and duration of calculation depend on how quickly information is passed from one stage to another. Tools, including those used for payroll, have a great effect on employees’ daily life. The development of technology allows automating many stages of work as well as the payroll process which is considerably changed as a result. This will undoubtedly affect accountant duties in the future so payroll accountants should develop their skills to keep up to speed with the changes brought on by new technology.
Payroll accountant perspective
Will automation do away with payroll accountants?
Although the payroll process has changed a lot in recent years, we have seen only part of what technology is capable of doing, and more and more work will be automated in the future.
With the main part of calculation automated, accountants will have time to perform other tasks. The Finnish Business Institute considers that the duties of accountants will change with time or become completely obsolete with a probability of up to 97%.
This sounds scary for accountants, but there is nothing to worry about. Even if the position of accountant disappears, new positions will appear for payroll specialists because payroll will remain a strategically important area of companies. So those accountants who can retrain will be able to carry on practicing in this field.
What skills will accountants need in the future?
Given the change of job functions, it will be necessary for accountants to develop in new areas. Modern accountants will need to gain the following knowledge and skills:
- Knowledge of new systems. When software programs perform more tasks, it becomes more difficult for people to manage them as they need to know and maintain system operation.
- Broad understanding of different functions. Payroll is already now closely related to many other functions both within and outside companies. An expert with knowledge of financial management, HR management, economics and related legislation will be a great asset for any company in the future.
- Strategic vision. To be successful in the future, accountants will need to develop their skills, professional expertise as well as actively explore new ways to improve the efficiency of everyday accounting tasks.
Automation requires effective management of changes
Accountants are not responsible for purchasing and installing modern software as well as introducing new processes, but management is.
Payroll tools – an investment in the future
Employee wages are one of the largest expenses incurred by companies so it is very important to determine the cost of the actual work performed by each employee. When estimating the cost of the work performed by an employee, the number of hours spent filling out papers, getting them approved and revising them is often not taken into account, and this work done for payroll ends up costing a lot.
Of course, less time is spent on paperwork in small companies, but when the number of employees increases, it is important to use time efficiently at all stages of work.
When assessing a payroll system, special attention should be paid to the transfer and management of information. Ideally, information about employees should be collected either in one system or in different systems with easy access to each other. Combining data on personnel, wages and actively analyzing them help management make fact-based decisions (for example, make projections for necessary use of labor and costs in the future).
The company Valio is a good example of process optimization and unified data management. Valio combines its employees’ payroll and HR data in one system. Combining these data together has made the work of both management and accountants easier as information is transferred faster and processes have significantly improved.
HR management perspective
Payroll automation has a positive effect on work relationships
Payroll is an integral part of work relationships so documents for payments, accounting and any related matters are usually necessary for HR departments. Automation allows connecting payroll and HR recordkeeping functions even more closely by combining data in one place and simplifying process management.
It is also easier for employees to search for information in a single place when they want to find out about their hours worked, their remaining number of vacation days, upcoming payments, etc.
When automating processes, HR departments become responsible for system operation so that they are able to perform their tasks as before both for the employees and the company as a whole.
Effect on company prosperity
The prosperity of companies is highly dependent on their employees’ well-being. The automation of processes considerably simplifies employees’ daily life as automation:
- Reduces manual work;
- Frees up time for more meaningful, useful, creative and interesting work;
- Eliminates unnecessary stress, ensuring the correctness of payroll as well as reducing the risk of errors and the number of corrections.
All this helps companies to improve how they are run on a daily basis and their prosperity as a whole. This also helps employees to be happier.
Effect on clients of accounting companies
Satisfied clients are one of the most important goals of payroll outsourcing companies. With the development of technology, clients can get a higher level of service so, when developing and selecting new tools, companies should consider their clients’ needs and wishes.
What clients should expect from accounting companies
All companies strive to improve their processes so clients of accounting companies increasingly need more than just payroll. Interconnected systems and quick data transfer will be even more important in the future.
Among other things, clients will need the following in the future:
- Integrated payroll and HR recordkeeping systems that simplify HR management;
- General access allowing both accounting companies and client to have access to the same information about employees and their wages;
- Electronic approvals: confirmation of vacations, business trips, sick leave, etc. in applications considerably speeds up the process and requires little time away from daily tasks. At the moment, many documents need to be duplicated in paper form as required by law, but, in the future, paper applications will no longer be required;
- Effective reporting helps various company departments;
- Improved data protection – in the era of GDPR, using Excel is no longer sufficient to meet customer needs.
The above article outlines not only the future of payroll but also current opportunities. We already now use some of the features listed above although not everything can be automated for the time being. Some documents (for example, vacation application) must still be submitted in paper form.
Many of the features described in this article are already available now, and both professionals and companies will need to master them in order to keep up in the future.