Blog

16 September 2022

Payroll evolution: brown envelopes to bitcoin

Image
cash machine to bitcoin the payroll evolution

The nature and delivery of payroll has changed dramatically. Payroll isn’t just a periodic ‘admin task’ – it’s vitally important in keeping any organisation running efficiently and legally.

What future trends can we anticipate? How will people be paid in the future?

Trends and changes

Different factors are influencing changes in payroll. Cloud-based technologies are speeding-up administration and delivery while the physical payslip becomes a thing of the past as employees use self-service to view pay details. The world of work is changing and how people are paid will change with it. Expectations will play a part in future payroll developments. There will also be a need for payroll software to integrate effectively with other applications. Payroll providers will need to adapt to technology changes to maintain pace with changing market demands.

Trends in payroll will also be driven by the changing needs of workers. Businesses need to adapt to:

  • Using more contractors and freelancers to keep costs flexible and more effectively manage peak periods.
  • Greater variation in the hours people work each week.
  • Splitting pay – some workers wanting a proportion of their pay paid into a different account, sometimes overseas.
  • Pay-on-demand (earned wage access).

 

Immediate concerns

Short-term, payroll management must consider the cost-of-living crisis. The need to access pay earlier in the normal pay cycle, ie before payday, will be a pressure felt by many people.

Employees will expect flexibility

As some rigid business conventions gradually disappear, organisations need to be agile and flexible. Payroll will adapt because people and businesses expect it to. Things will become more employee centric. Flexibility to suit individual needs as well as collective business ones is vital:

  • Flexibility in how and when people get paid will become increasingly prevalent as things shift from rigid monthly and weekly pay cycles
  • Employee benefits will become more variable – impacting on payroll administration.
  • Cloud-based ‘payslips’ – the ability to see pay details at any time from different devices will become the norm.
  • The cost-of-living crisis means businesses must be prepared to help manage employee financial concerns. Financial education and pay flexibility will help assuage many employee concerns.

Being able to pay people the way they want to be paid (with benefits that suit them) will give employers a competitive advantage.

Other ways to get paid

Being compensated for working doesn’t have to be limited to the constraints of cash, cheque or payment into a bank account. Another alternative – the virtual wallet – is gaining popularity and growing exponentially. It’s user-friendly – storing all debit, credit and rewards cards virtually, on a smartphone. Payment can be made directly to the virtual wallet and allocated according to need. Added security is a clear strength – the authentication processes when using a smartphone offer additional security compared to a credit or debit card. Employers can consider paying directly into certain accounts stored in the virtual wallet.

And of course, there are cryptocurrencies. Many people are now paid in Bitcoin (BTC) – though often as just a part of their overall remuneration. There are various attractions to BTC and other cryptocurrencies, including greater degrees of privacy and, longer term potentially, increases in value. Cryptocurrencies are largely currently perceived as used by tech people and celebrities, but that will change as it moves more mainstream. Before long, employees will enquire about being paid in cryptocurrencies and eventually some may demand it as part of a condition of employment.

With increased ability to automate processes, manage data more effectively and integrate systems, the options on how, what and when to pay people will increase. The different outcomes, satisfying different employee needs, augurs well for employee satisfaction and business operations.

Real-time payroll

Powerful for both employer and employee, real-time payroll is a “does what it says on the tin” thing. Businesses get visibility of their wage bill to a precise, given point in the month. Employees see exactly what they have earned to that point in the pay cycle.

For businesses, real-time payroll is a revolutionary planning tool. The ability to adjust budgets or reallocate resources becomes easier and can be implemented quickly. It delivers benefits to payroll teams through reduced risk of errors and simplified processes and time savings.

Simon Wooldridge, Content Writer, MHR

Simon Wooldridge

Simon is a content writer at MHR.

Back to blog listing