Payroll never stands still

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Payroll is one application everyone both loves and hates. We love payroll simply because we love, and need, to be paid for our work efforts. But when those work efforts are on the other side of the paycheck, it’s not as much fun.

Over the years, payroll has evolved. Yes, at its core it’s still gross to net, but it has grown beyond just keeping track of rates and hours. Today’s payroll systems have expanded to include essential human resources functions, from the initial interview to the exit of the employee. Additionally, many payroll service bureaus have gone beyond just cutting checks and making direct deposits, offering such amenities as insurance and pension services. As we do annually, we surveyed seven providers of payroll and ancillary services to see where they are at the moment, and where they think the payroll industry is moving.

People are the focus

Payroll itself is a fairly generic application except in the instance of vertical markets such as construction. Most payroll systems today allow for an individual employee to have more than a single job title and pay rate. Specialized reporting, such as union reports, is also pretty standard among today’s payroll service bureaus and software suppliers.

But increasingly, managers are realizing that people are a company’s most valuable resource. And keeping track of them is often the responsibility of the human resources department. As a result, many payroll suppliers have added this capability to the mix, both as an integrated part of the payroll services they provide, or as an important adjunct to the payroll system.

ADP is one vendor that got into HR and other services early in the game. According to Erron Stark, division vice president of channels, “Just like accountants do much more than accounting, ADP does much more than just payroll. For 70 years, we have been designing better ways to work through our cutting-edge HR, talent, time management, benefits and payroll products and services.”

Stark continued, “To help employers build the right team, we can provide resources such as ADP recruiters, access to ZipRecruiter technology in our RUN Powered by ADP platform, customizable job descriptions, interviewing checklists, candidate assessment forms, background checks, and a seamless digital onboarding tool. To help employers craft a competitive job offer and compensation package, ADP DataCloud and Compensation Benchmarking, Powered by ADP DataCloud, offer access to current pay data that can be filtered by title, industry, location and employee size.”

Paychex is another vendor that offers all-around HRT services in addition to payroll. As Tom Hammond, vice president of corporate strategy and product management, told us, “Paychex Flex is an all-in-one HR solution that provides scalable solutions for recruiting and applicant tracking, time and attendance, hiring and onboarding, insurance, payroll processing, health benefits administration, HR record management (HRIS), performance management, learning management, and retirement services.”

Not all of the vendors we surveyed offer ancillary software applications that complement their payroll offerings. For example, AccountantsWorld doesn’t directly offer HR software, but does have an API that lets other HR solution providers integrate with its Payroll Relief, according to CEO Chandra Bhansali. This extends Payroll Relief’s capabilities into health benefits, insurance, workman’s comp, and other offerings.

Put ‘er there, partner

The vendors we surveyed vary from offering payroll services to the clients of accounting firms, to providing software that lets firms run their own payroll service bureau. For example, Thomson Reuters covers the bases with two payroll-related applications. “Accounting CS Payroll provides advanced payroll processing software for time entry, paycheck delivery, and tax compliance delivery,” Louie Calvin, proposition strategy lead for large firms, told us. “Batch-oriented and fully automated, it quickly performs the payroll calculations for you, and cross-client processing means you can significantly increase the number of clients you serve, without hiring more staff. This is the solution for start-to-finish payroll for in-house processors.” Thomson Reuters also offers myPay Solutions: “This provides firms easy and efficient payroll services without the liability or hassle of processing. Implementing a streamlined payroll processing partnership with a trusted advisor like Thomson Reuters enables them to empower staff, focus on client relationships, and enhance advisory services centered around helping their clients make better business decisions. The firm can focus on the services that get greater ROI or on what they do best”

On the other hand, Gusto is strictly a service bureau. Spokesperson Rick Chen said that nearly 5,000 accounting and bookkeeping firms across the U.S. partner with Gusto to serve small and midsized businesses, many as a part of premium business consulting or outsourced or “virtual” CFO services.

“Gusto partners receive free payroll for their accounting firms, ‘white-glove’ service to migrate their clients onto Gusto, and access to a dedicated accountant support team and marketing services, such as inclusion in the Gusto Partner Directory, to promote their firm. Partners also earn revenue and discounts for their clients,” said Chen.

SurePayroll is another service bureau that partners with accounting firms, according to CPA sales manager Jorge Lopez: “SurePayroll provides accounting firms two partnership options to provide their clients with a payroll option and increase their bottom line. Neither requires upfront investment and both enable firms to run payroll and accurately collect and file federal, state and local taxes for their clients. By referring small-
business clients to SurePayroll, firms can give clients an easy and secure payroll solution and have real-time access to their clients’ payroll reports, free of charge. SurePayroll compensates partner firms for each referral.”

“Becoming a reseller partner allows accountants to grow their business by offering SurePayroll’s online payroll service right from their own website,” Lopez continued. “Additionally, firms have the option of white-labeling the SurePayroll solution, giving their clients a fully branded online portal that can be accessed from the firm’s website. SurePayroll also provides our accountant partners with dedicated support from an experienced accountant care team, and we guarantee our payroll tax-filing services. If an accountant or their client receives a notice from the IRS, or any other tax agency, based on a filing that SurePayroll made, we’ll work with the agency directly to help resolve the issue on their behalf. And if we are at fault, we will pay all the associated penalties and fines.”

Not every vendor has elaborate partnership opportunities, but most offer at least some way that an accountant can work with them. For example, Patriot Software offers a partnership opportunity with accountants and bookkeepers who process payroll for clients. Accountants and bookkeepers become “Certified Advisors” and receive the benefit of wholesale pricing as well as enhanced software features such as “umbrella logins” and “multi-users,” according to marketing manager Michele Bossart.

Providing a portal

Today’s employees and employers require immediate access to payroll information. So do accounting firms, especially when that data pertains to their clients. One way to achieve this is through the use of portals.

“Gusto offers small-business owners and payroll administrators access to a dashboard which serves as a source of truth for their business,” according to Chen. “They can analyze reports about employee benefits, employee engagement, employee records, payroll and relevant financial or practice management data such as cash flow or expenses.”

“Accountants and employees are also covered,” Chen continued. “Accountants have a partner dashboard where they can manage their complete book of business. They can run payroll for all of their clients with one login and click, view upcoming deadlines, and access and administer employee benefits and human resources tools for their clients. And employees have lifetime accounts with Gusto, so they can access their employee handbooks, pay history (i.e., paystubs) and Forms W-2 from their secure document vault. They can also e-sign any essential documents, such as their Forms I-9 and W-4, easily, conveniently and securely — allowing new hires to self-onboard, even before their start date.”

AccountantsWorld’s Payroll Relief also offers portals for accountants and their clients. According to Bhansali, “The firm portal is an integral component of Payroll Relief. Accountants log into Payroll Relief though a firm portal independently or through their website. We also offer client portals for data entry, and have a mobile app for employees to view paystubs and download W2s.”

SurePayroll is another vendor that provides its accountant partners with a streamlined, secure dashboard that enables them to manage client payroll and access reports. “Additionally, we also provide a portal for a firm’s clients to use — providing the payroll services to their small-business clients (and their employees). Our partners also have the ability to white-label the payroll portal, allowing for their brand to be presented to their clients,” Lopez said.

Bringing payroll to the back office

The past several years have seen an increasing trend toward tying payroll to other back-office applications such as accounting. We surveyed our vendors to see how they are implementing this important synergy and the benefits of doing so. “We’re proud to offer real-time data integration capabilities with leading accounting software packages, including Sage Intacct, QuickBooks Online and Xero, and are continuously working to enhance these offerings,” Hammond said. “Recent updates include enhancing the import functionality and onboarding processes, as well as providing accountants the ability to do accruals. We provide a bundled service with this integration — included at no additional cost to the accountant or business owner.”

And Patriot Software addresses this integration by offering both payroll and accounting software. “Our payroll software integrates seamlessly with our online accounting software,” Bossart said. “One benefit of this seamless integration is the convenience of accessing both the accounting and payroll (and time and attendance) software under one login.”

A chance for something new

Considering how far payroll services have come in the recent past, we wondered what trends we might see in the near future. “People now expect to be paid outside of typical payroll cycles or schedules,” said Gusto’s Chen. “Gusto launched Flexible Pay, a new feature that enables employees to choose when they want to get paid — independent of their employer’s pay or payroll schedule.”

ADP’s Stark agreed: “As the gig economy continues to grow, the need for better tools to organize, manage and pay freelancers and contractors is also growing. Workmarket, an ADP company, is a freelance management system that helps employers with hiring skilled professionals from a pre-vetted talent pool, automating low-value tasks that save time and increase efficiency. A related trend to the growing ‘on-demand’ workforce is the desire for ‘on-demand’ and electronic pay options. In a world of rideshare and food delivery apps, today’s workers are also looking to be paid faster, no longer willing to wait a week or two. Wisely by ADP and DailyPay on ADP Marketplace are some of the ways ADP addresses these trends in pay today.”

Thomson Reuters’ Calvin went into more detail with how he sees the payroll and HR trends developing: “Businesses have more success attracting and retaining employees when they offer the convenience of digital onboarding, online payroll tools to collect time, and time clock information. Payroll providers must offer the same online, anywhere/anytime, paperless delivery tools, so we see more firms investing in the tools to offer these to clients. Also, new laws and regulations, such as mandatory sick pay, state and local minimum wage rules, the Affordable Care Act, and more are making payroll difficult for businesses to handle on their own without professional assistance. This has resulted in more firms and businesses outsourcing to ensure the accuracy and timeliness of their payroll.”

Paychex’s Hammond added, “The evolving regulatory environment will continue to impact payroll in the foreseeable future. As the federal government looks to reduce the regulatory pressures on business, state and local governments are introducing their own regulatory measures at a fevered pace — meaning that it’s more difficult than ever for business owners to keep up with ever-changing HR and compliance demands. Accountants need a trusted payroll and HR provider who’s connected to every legislative agency, a trusted partner who can help them navigate the complexities of doing business today.”

Thomson Reuters also has its eye on the future. “Many new payroll enhancements and product needs we are currently working on or keeping a close eye on include reacting to those proposed changes when the IRS finalizes the 2020 W-4. This will have a big impact on those in the payroll services business,” Calvin said. “The importance of intuitive, beautiful client experience, and collaboration tools are important for all in the business of payroll and this will be a priority for Thomson Reuters to improve that experience.”

Just how quickly the payroll industry and accounting firms move in these directions will be interesting to watch, and the improvements and enhancements hopefully will increase the benefits of firms offering payroll services, or working with vendors that provide these, in a service bureau environment.

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