Since the beginning of the “business world,” as we know it, payroll has remained a critical aspect of business growth.
One of the earliest known examples of payroll, dating back to around 3,000 BC, is a pay stub showing workers being paid in beer rations. Less than 100 years ago, some companies paid employees in company scrip. During the company scrip days, workers would find themselves in a less-than-ideal cycle of debt due to fees and the high prices of goods, as portrayed in the song Sixteen Tons by Tennessee Ernie Ford.
Interestingly, as times have progressed, we are seeing more and more people continue to live in this cycle of debt due to outdated payroll processes. In fact, 68% of workers today are living paycheck to paycheck, and 83% of people under the age of 35 wish they were getting paid faster.
Most businesses process their payroll on a two-week basis, a cycle originating back in the 1940s when Congress passed the Current Tax Payment Act of 1943, which required businesses to begin withholding taxes and pay them directly to the government on the workers’ behalf. This tax withholding practice ultimately resulted in the two-week pay cycle as we know it commonly today.
It’s interesting to examine that so many companies rely on outdated payroll practices, especially when payroll remains one of the most critical business operations. When companies prioritize payroll, it can be a true driver for businesses. Here are a few ways companies should approach payroll innovation as a growth mechanism for their business.
Determine a Faster Payroll Structure for Your Company
When making the commitment to improve payroll processes, companies need to look specifically at the logistics around when and how their employees are paid.
With more people working remotely, traditional office-based perks don’t deliver much value to the employee experience anymore. That coupled with inflation and employees feeling the strain on their bank accounts more than ever presents an opportunity for savvy employers to look for innovative solutions such as instant payouts or flexible payday options.
Each year, nearly 12 million Americans are using payday loans, which can come with interest rates reaching 400 percent, forcing them into a never-ending debt trap. When businesses embrace flexible payment options that allow employees to get paid as they’ve earned their wages, it not only improves the worker’s overall financial situation but also can lead to cultivating a happier, more engaged company culture and improve recruiting and retention.
Turn Payroll Technology Into a Revenue Opportunity
Certain companies that have businesses as clients, should view payroll as a potential new product offering. Apps or platforms that already support business workflows like scheduling, time tracking, or workforce onboarding or management are ripe for launching a payroll product. However, building payroll from scratch is a daunting task. The good news is that today there are Payroll-as-a-Service companies offering solutions for launching payroll experiences and operations within weeks, allowing companies a faster turnaround time to grow their revenue and attract new customers.
These solutions usually offer white-label UIs for a seamless experience and embedded components, which also speed up time to market by solving critical workflows, like new worker onboarding, with pre-built components. This allows businesses to deploy them into their own environment with little dev work required.
The Changing Expectations of Payroll
We’ve seen the expectation in how people get paid change, and that’s been driven largely by the gig space and the gig workforce. With nearly 60 million gig workers out there, representing 26% of the workforce, payroll expectations are evolving. These expectations will likely bleed into the rest of the workforce, and in the next decade, 1099 and W-2 workers alike will expect faster paydays.
More and more companies are relying on gig workers to move their business operations forward. For these organizations, it is critical to ensure that proper infrastructure and payment processes that specifically support this workforce are in place – not only with faster payments but also with 1099 compliance and the ability to meet ever-shifting worker classification requirements.
When you look at the advancement of technology in general, developers are always moving towards “real-time” access. The payroll expectation is no different. We are in the beginning phase of a new cycle of innovation in how workers are paid, and payroll as we see it today is ripe for disruption. What better way to embrace this change than by making the commitment to use payroll as a true strategic business driver?
Discover the full potential of your Hrtech strategy with our comprehensive Hrtech News and Hrtech Interviews.
Want to Contribute? CLICK HERE To Submit Your Guest Post and Join Our Community of Writers!!!
ABOUT THE AUTHOR
Ron Ross
President, Co-Founder, and Chief Operating Officer at Everee
Ron Ross is the President, Co-Founder, and COO of Everee, a payroll and business payments platform that’s revolutionizing the traditional two-week pay cycle. With 15 years of experience in finance, he created Everee to address the issue of payday and bill mismatches after witnessing its impact on his daughter. Ron focuses on product development, payment and tax operations, strategic banking partnerships, and customer experience. Under his leadership, Everee has grown its team by 5x and secured $14M in Seed and Series A financing rounds. Ron’s prior roles include CFO at Teem, CFO/COO at Ecoscraps, and Principal Accounting Officer at Skullcandy. In his free time, Ron enjoys trail running, collecting vinyl records, and traveling with his wife Mindy.