The Australian payroll market used to be dominated by five or fewer payroll vendors. Payroll technology is complex, but its market is opening up and we’re seeing new entrants every year.
The shift to Single Touch Payroll (STP) has been a very large-scale and abrupt transition for payroll teams to adopt. It has meant not only a change in processes and continuous, accurate reporting, but also a migration from paper processes with payment summaries to electronic reporting through MyGov.
This is a big leap, akin to when people moved from cash pay packets to direct credit in their bank accounts. It has also opened up employees to uncomfortable levels of transparency. Here’s what your organisation needs to know about this changing landscape.
The market shift
There is a dilution in payroll skills out there in the market. I’ve noticed a distinct shift away from what I would call ‘Beryls and Cheryls’ of payroll for the last 30 years. Typically, the market used to centre on career payrollers who started processing payroll manually and could still do this with confidence. They relied on their knowledge and checked every last cent with confidence. There were also the ‘Jessicas and Jennifers’, or those for whom payroll was just part of their job or a pathway through to human resources roles.
Now, more trust is placed in software and exception reporting rather than checking every transaction. They rely on their software vendor for advice and guidance. That’s not to say that’s the hard and fast rule for everyone, but it’s a shift I’ve observed over the past five years.
Cloud, mobile and API integration with payroll
There is a distinct demand for businesses to move toward bespoke API-driven ecosystems. This is largely because of the difficulty of moving to one platform all at once with legacy systems in place, the change of management required to move, and, most importantly, a general acceptance that APIs are effective.
However, the maintenance of these APIs can be time-consuming – especially with the reality of rapidly changing solutions within the SaaS world and where legislative changes are involved. Also, businesses are recognising that data is their most valuable asset – not only from an insights perspective but from a data protection perspective.
The security around APIs and payroll is something that requires thoughtful and careful consideration, particularly around security, future-proofing, data integrity, maintenance and support. It’s also vital to stay up-to-date with changes from various providers, and the costs of reviewing those overheads.
The challenges with the payroll transition
- Integrations are time-consuming
Keeping systems in sync through one platform, one experience and one dashboard is a challenge that requires overhead to maintain.
- Technology advances can pose a threat to security
Compliance and change management is an ongoing challenge with payroll integration, particularly around security and personally identifiable information (or PII). As technology advances, these areas need to evolve. There has never been such a rapid and constant stream of high-impact changes in the Australian payroll landscape. STP phases 1 and 2, the Superannuation Amnesty and the transition to more digitised government services over the past few years has been a large shift.
- Payroll transitions require change management
Changes present challenges for all businesses, no matter how big or small, and place an unprecedented emphasis on timely and accurate reporting. Accountants, CFOs and CEOs and small business owners who are responsible for payroll have had to be more aware of the mechanics of payroll reporting rather than undertaking the process once a quarter or once a year. And while the ATO has already been softly applying penalties for non-compliance, this is likely to increase over the next few years.
The key takeaway here is that, as always, it’s vital to strike a balance between technology and skilled personnel when it comes to payroll. Moving forward, compliance training and updates will be more important than ever for payroll professionals and their employers. With the right approach, payroll technology will continue to enable a more attractive, cost-effective and superior employee experience solution.
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