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Happy National Payroll Week! All week long, we’re celebrating our beloved payroll professionals who deliver our paychecks month after month. According to nationalpayrollweek.com, “Together through payroll withholding, we contribute, collect, report, and deposit 70% of the U.S. Treasury's annual revenue, about 2.4 trillion per year.”
While we’re thanking our payroll professionals around the country, we’d also like to shine a spotlight on some of the challenges and trends in payroll in 2018 and the coming year. At the American Payroll Association's Annual Congress, Bloomberg Tax took a moment to interview APA President, John Raguz, CPP. Here are some of the challenges and trends he expects the payroll industry to face in the next year:
Payroll challenges in 2018 and 2019 according to the APA President
Legislative change
We’ve already seen a lot of change under the current administration, and the upcoming elections in November will be telling for what changes may come and how they'll impact payroll. According to its regulatory agenda, the Department of Labor (DOL) will be taking a closer look at Wage and Hour and “regular rate” of pay. The results will certainly impact payroll professionals, particularly in the way overtime pay is calculated.
Data security
Payroll professionals are no strangers to dealing with sensitive information. However, according to Raguz, companies should be concerned with limiting access to this data outside the payroll department. The way this data is handled not only affects the payroll department and your employees, it affects the brand image of the entire company. Payroll professionals will be held to high standards to protect sensitive employee information.
Analytics
“It’s not just the data we have, but how we use that data.” You’ve probably heard a fellow payroll professional ask, “What is our scorecard?” But Raguz challenges payroll departments to take it one step further: “How do we use that information to make our company better?”
Payroll trends in 2018 and 2019
Raguz also identified a top trend in payroll:
Artificial Intelligence
This buzzword has been getting a lot of attention in the HR and payroll space lately. According to Raguz, “It’s making us work smarter, better, more efficient.”
Raguz also addressed other related terms like robotics and automation. Ultimately, he believes the question is about how this will affect what our vendors provide in terms of software. He challenges vendors to step up in this area and help smaller businesses stay on the cutting edge when they don’t have the resources to do so on their own.
Additional payroll challenges
We’ve looked at high-level payroll challenges from an industry perspective, but that doesn’t tell the whole story. Let’s take a look at some everyday issues a payroll professional faces, along with some practical solutions.
Payroll managers have to ensure everyone is paid accurately and on time—and in accordance with the tax labor laws in their state and country. This gets even more complicated for companies with a presence extending beyond a single state or nation.
According to TMF Group’s Annual Global Payroll Survey, the top three challenges payroll professional face include:
Keeping up with compliance
Compliance is easily one of the biggest challenges HR and payroll professionals face. Not only can legislation be complex and difficult to understand, but with changing administrations comes regulatory changes that make it even more difficult to maintain compliance in the workplace. Not to mention the usually giant price tag attached to noncompliance—something no business wants to affect bottom line.
Workforce compliance solutions
While we’re not lawyers accredited to give legal advice, we do strive to keep our readers educated on regulatory laws and changes. Keep up with our HR and Payroll Blog and get updates from our Compliance Tracker to avoid getting overwhelmed by all the information and legalese out there.
We do our best to unpack the complicated legal jargon and re-package it in a way that’s easy to understand so you can get back to supporting the humans of your organization. Whether you’re managing compliance for FLSA, ACA, FMLA, or any other members of the alphabet soup of regulatory laws in the workplace, know we’re committed to keeping you in the know and helping you achieve successful compliance for your organization.
Vendor management
Moving up from the third to second-place ranking from the previous year’s results, vendor management is an area where a lot of (if not most) payroll professionals struggle. Digging deeper into the issues with vendor management, the survey reveals three main areas of struggle:
- Inaccessible account managers
- Slow and inefficient problem escalation procedures
- Lack of coordination of deliverables across multiple contracts
Do your homework
There are a lot of companies out there who promise top-notch customer service, but they don’t always deliver on those promises after they’ve locked you into a contract. Before you work with a payroll vendor, take time to study their product and read reviews from actual customers. They’re payroll professionals just like you who can speak from their own experiences on the good, the bad, and the ugly (or the awesome) of payroll services.
Never underestimate the value of support. You may be impressed by a flashy product or special deal, but when you’re in the weeds of your day-to-day payroll duties, think about what matters most: being able to accomplish what you need to accomplish on time and with ease. Work with a vendor who can not only offer a helpful product but also act as an extension of your own team.
You don’t want to be stuck with an automated recording or robot to help you when things get rough. Instead of an uninformed customer service rep that changes with every phone call, you need a vendor who can offer you real support, who knows and understands your company structure. Imagine working with the same support person or account manager for the lifetime of your account, starting with onboarding your company with the new software on day one. That takes the challenge of vendor management and turns it into collaboration between teams.
Inconsistent policies and processes
According to survey responses, seven out of 10 payroll professionals surveyed reported having gaps in policies and processes. Lack of alignment between policies and processes can cost your business time and money. Implementing the right controls can help payroll managers find consistency between these two areas. This is especially important for organizations operating in multiple states or countries. Payroll policies aren’t one-size-fits-all, so you’ll need to ensure you work to maintain consistency across offices.
Managing payroll is not for the faint of heart. We thank you, payroll professionals, for all the work you do between paydays to make delivering our paychecks possible. The precision and strategy it takes to be a payroll manager is not something you take lightly. But manual practices and antiquated systems can leave you spending way more time on payroll than necessary.
In our Guide to Saving Time on Payroll, learn ways to effectively manage payroll without letting it consume your day. Get time-saving resources, practices, and tools to help you manage payroll better and faster.
