Payroll has a reputation for being a slow-moving department. However, while there seems to be no major changes or changes in the world of payroll, aside from ongoing legislative changes, the constant advancements in technology are not without impact on the payroll sector.
Jeff Ryan, MD, AWCape
Add to that new ways of working and a dynamic tax and regulatory landscape that is straining payroll teams.
Here are some of the key trends shaping payroll in 2023 and beyond.
1. Fluid Workforce
The world of work has completely changed. Hybrid work is fully entrenched, with many people working remotely all the time or part of the time. Many companies source remote talent nationally or globally. Many employers are also adopting more flexible working arrangements, such as using contractors and freelancers more extensively, or offering more flexible arrangements for those who want to work part-time.
Trends such as the four-day work week promise to bring even greater change. Payroll teams need to adjust their processes to accommodate a wider range of work models.
2. Vision 2024
Every February, the payroll team waits to hear about the upcoming PAYE changes for the new fiscal year at the Minister of Finance’s budget speech. These changes typically involve only minor payroll adjustments. But beyond 2023, more change is expected as governments and SARS begin to move forward on long-delayed agendas. The National Health Insurance is that he is one.
SARS’ ambitious Vision 2024 envisages abolishing the filing season in favor of a more real-time approach to personal taxes. Vision 2024 envisions using third-party data from third-party returns to prepopulate an individual’s “assessment” through the SARS app, which displays near real-time tax liability.
Employers may be expected to withhold employee tax (PAYE) based on this data. For example, if an employee contributes to a personal retirement plan or earns income from interest on a bank account, the employer is required to adjust the withholding tax appropriately. It’s not clear how close this vision is to realization, but it’s something payroll managers should already be thinking about.
3. Seamless workflow
Increasingly, midsize businesses are likely to follow the lead of larger companies by adopting solutions that allow for tight integration between finance, human resources (HR), employee self-service, and payroll. This reduces costs and increases efficiency by working with consistent data everywhere in your business and eliminating the need to retrieve the same data over and over again.
Organizations that integrate HR and finance with payroll reduce spending and resource usage and improve overall company performance. Plus, you have accurate, real-time business information to support better decision making. The integration of payroll and HR systems also enables a self-service experience that empowers employees.
4. Data-driven decision making
Most businesses are looking to use analytics to improve decision-making, and payroll is a potential gold mine of data. Data on absenteeism, overtime, employee attrition and retention, compensation, labor costs, and budgets can yield powerful insights into employee well-being, engagement, and satisfaction.
Data is even more powerful for businesses with an integrated view of HR, payroll, and finance. You can also delineate his KPIs for the organization, for example productivity or her per capita earnings. This year, we expect payroll teams to ramp up their use of analytics and move beyond basic reporting to partner with other functions for strategic growth.
5. Artificial Intelligence (AI) and Robotic Process Automation (RPA)
AI and RPA in payroll are still in their infancy, but some interesting use cases are beginning to emerge. We can assume that AI will play a role in data validation and anomaly detection, helping businesses further improve accuracy and detect potential fraud and errors more quickly.
RPA, on the other hand, helps streamline manual processes such as capturing data from scanned documents. An example of this is “intelligent time” capture software that prepopulates timesheet entries by analyzing previous timesheets and calendars.
The cloud is the foundation for next-generation payroll
Many payroll teams find it difficult to stay ahead of their managers when employee and tax regulations become more complex. We also recognize that stringent data privacy regulations require careful management of employee personal information. And of course, the pressure to be more efficient is never-ending.
This is why more and more payroll departments with manual/on-premises systems are moving to the cloud. Cloud-based systems allow HR and payroll professionals to work online and collaborate from anywhere. This is essential in the age of remote and hybrid work models. It is also the foundation for seamless workflows, data-driven decision-making, and AI adoption.
