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Cloud payroll: Cost centre or value centre?

The growing interest in cloud payroll systems is unsurprising given the unprecedented amount of complexity and change that modern HR teams are facing. In the era of the Great Resignation, employee expectations are on the rise. Most companies now employ hybrid and remote work models which add a further layer of intricacy to payroll operations. And payroll accuracy is more important than ever because payroll errors now often have very high stakes. 


Even minor mistakes can lead to public embarrassment and a loss of credibility with the best potential employment candidates. In 2020, the IRS assessed U.S. employers about $6 billion in penalties for miscalculating or missing payments, and in 2021 a “name and shame” campaign and law suit led to millions of dollars in fines and reparation costs for hundreds of UK employers, including several very well-known companies.


However, the good news is that a modern cloud payroll system can turn these challenges into significant new opportunities. Cloud payroll not only reduces complexity but also helps manage risk and boosts protection with cloud security. What’s more, it can play an essential role in employee satisfaction and retention.

What is cloud payroll software?

Until recently, payroll solutions were mainly on premise. They were hosted on internal servers, required businesses to purchase a software license upfront, and required infrastructure to support the system, including IT staff and ongoing budgets to maintain it. 



With cloud payroll, your provider manages all software upgrades and maintenance, saving you time, money, and the need for in-house expertise and hardware. Your employees will love cloud payroll as well as it gives them the flexibility to view their payroll and benefits documents on a laptop or mobile app. Cloud payroll software connects and simplifies every part of the process – from compensation to payroll taxes to ensuring compliance. It also enables your payroll team to access and manage payroll from anywhere they have access to the internet. And it does all this while protecting company and employee data from breaches or unauthorised access thanks to robust, built-in cybersecurity protocols.

A cloud payroll management system simplifies global payroll processes, so you can pay employees accurately and on time.

Pay transparency and pay equity

It’s long been taboo to talk about how much your co-workers make. However, as with so many things in the wake of COVID-19, employees’ expectations are changing. They want to know where their employers stand on social issues, how the companies they work for invest their money and have transparency into the salaries for everyone from the CEO down. Legislation is changing alongside employee expectations. Cities and states are increasingly enacting pay transparency laws that require that every role’s salary range is listed in the job description.



Focusing on pay equity as well as pay transparency is imperative. Women earn 82 cents for every dollar earned by men. And other gender, and racial pay gaps persist – with new ones emerging. For example, city-based businesses are seeing a notable rise in workers leaving expensive urban centres and working remotely from less costly locations. This raises a complex cluster of HR challenges including whether or not to adjust pay rates for locational cost of living (and if so, how), plus grappling with different taxes and deductions for workers in other states, provinces, or even countries. Pay transparency and pay equity benefit both employees and employers. Disclosing internal pay structures and committing to pay equity builds employee trust and loyalty, increasing employee retention. And companies can use data from cloud payroll systems to support pay transparency and pay equity efforts.

Cloud payroll is boosting financial wellness for employees

Employers are looking for ways to gain a competitive advantage. Offering financial wellness benefits such as student loan assistance and personal financial planning services through a cloud payroll portal can support overall employee wellness. In fact, 62% of employees factor in the well-being benefits an employer offers when deciding whether to apply for a new job – demonstrating that total compensation goes beyond salary and bonus. 



Expanded financial wellness services that support employees include retirement planning, digital budgeting, and access to financial advisors. On-demand pay, and alternative payroll options also contribute to financial wellbeing and are becoming more common. 



Workers who are stressed out about money are less productive and engaged. As Josh Bersin says, "ultimately, well-being is about performance. It is no longer a benefit, but a business need. It must be integrated into leadership, management and employee models." 

Additional benefits of cloud payroll software

Cloud payroll systems support greater efficiency and help businesses save on time-consuming HR and payroll expenses, hardware, and on-premise software. And with its access-anywhere interface, payroll teams have responsive and powerful tools at their fingertips.


  • Centralised employee data: Using cloud-based payroll software to centralise employee data offers convenient access to all essential employee information. It also simplifies maintaining accurate data so that payroll and HR teams can rest assured that the data they’re accessing is correct. Convenience aside, centralising employee data to be accurate and secure also supports compliance needs and is a big focus area for companies that have grown by acquisition. 
  • Providing on-demand pay options: On-demand pay supports workers' financial well-being, making it easier for them to meet unexpected expenses and avoid going into debt. It can benefit companies as well. For example, in industries where businesses are competing for employees, offering on-demand pay can make a company more appealing to prospective candidates. The traditional two-week pay period harkens back to payroll teams needing time to calculate payroll taxes manually. Modern cloud payroll technology can automate that process to make streaming pay a reality.
  • Increased data safety and security: Part of what cloud payroll providers offer is built-in safety and security features – after all, their reputations rely on keeping client data secure. Because they house confidential employee and business information, payroll vendors don’t just encrypt and backup client data; they also invest their resources in data and infrastructure security, including disaster recovery protocols.

Pre-payroll monitoring with alerts and analysis in a cloud payroll.

  • Scalable and customisable: Scaling on-premise payroll software can be cumbersome and time consuming. Cloud payroll software has built-in features and is designed to scale as businesses expand or their needs change. It also can configure and customise settings – streamlining adding new roles, contractor reimbursements, API access, and more. 
  • Simplified compliance: Getting compliance wrong can be expensive. When new laws are passed or existing laws change, cloud payroll is much better positioned to incorporate these changes to regulations, ensuring businesses stay ahead of critical deadlines and avoid penalties. And for companies with a global reach, cloud-based payroll includes global localisation capabilities to keep companies compliant wherever they operate. 
  • Accurate reporting and analytics: Cloud-based payroll eliminates the need for manual data entry and the accompanying possibility for errors. They can also consolidate payroll details based on real-time data and generate customised reports with the push of a button. Using payroll data analytics to spot trends and patterns helps companies make better business decisions.
  • Accessible and flexible: The cloud allows employees to access their data whenever, and wherever they want. This boosts employee engagement and trust, and it also frees HR from some of their administrative responsibilities, allowing them to focus on the bigger picture. This accessibility and flexibility brings significant benefit when the future of work is hybrid

Next steps in transforming to cloud payroll software

Cloud-based payroll offers much more than just streamlined payroll services. It plays a vital role in supporting a positive employee experience and increasing employee retention – not just by increasing their trust by paying them the right amount on time, every time, but by supporting their financial and mental wellbeing. Cloud payroll also integrates with your overall business strategy to provide insights into where money is spent and offers real-time reporting and analytics that supports your whole business.



But like any major operational shift, change can be a little scary and it takes people to time to adjust. The keys to a successful cloud payroll rollout lie in good communication and a strong change management strategy. Show people all the improvements they can expect, help them learn the user-friendly tools, and share your enthusiasm for building a stronger and more resilient workplace.

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