Banking
How real-time payments are revolutionising payroll
By Ian Wheeler, founder and CEO of northwest-based fintech payroll company, Income Group, explores the emerging trend of real-time payments in the payroll space, and how these new processes are revolutionising the industry.
Income Group’s platform, IGsend, is one of these platforms that are empowering the payroll space through instant, real-time payments.
In today’s world, the ability to transfer money in real-time, at any time, to friends and family, or another business, is a given. It has fast become standard practice to make a bank transfer and expect it to land in the recipient’s bank account within a matter of minutes.
Why then, does this expectation of immediacy not extend to one of the most important payments many of us receive every single week or month – our salary payments.
Many businesses, big and small, are instead continuing to rely on what many would argue are outdated payment processes to pay their workers, often suffering delays and tight deadlines to do so, month on month, year on year.
Here, Ian explores how the adoption of faster payments is growing year by year, and how this process far outstrips traditional payment processes…
Are we seeing the back of BACs payments for payroll?
The BACS (or Bank Automated Clearing Services) process is more than 50 years old now, and it can sometimes take payroll functions, HR teams and business owners days to organise pay runs, especially if they run complex payrolls.
BACS was created in the days when the bank branch was central to business. It takes three days to make payments, and only between core business hours Monday to Friday excluding public holidays. It’s often inflexible and, if mistakes are made, they can be costly and time-consuming to rectify.
In our current, digital, first world this approach to payroll has rapidly become outdated; technology has moved on, and innovation is changing the world we live in for the better.
However, there is an effective solution to these payroll challenges, and it’s the very same technology we’ve welcomed into our daily lives: Faster Payments.
What are Faster Payments?
Put simply, Faster Payments are electronic payments you can make online, by phone or in a bank or building society branch that will arrive with the recipients’ bank account almost immediately (sometimes up to two hours), any time, any day.
According to figures from pay.uk, in 2021, Faster Payments processed 3.4 billion payments, an increase of twenty per cent year on the previous year, demonstrating that demand for Faster Payments is growing at an exponential rate.
Convenient, quick, and digitally-enabled payment processes are better suited to our digital, first world and align more closely with consumer and employee demands.
Faster Payments as an emerging trend
Faster Payments bring a host of benefits that respond to many of the pain points for payroll and HR teams in businesses everywhere. They reduce overall payroll-related costs, mitigate risks caused by human error and alleviate pressure on payroll teams at specific points during the month.
In 2021, £2.6 trillion was transferred by Faster Payments and we can expect to see this figure increase further in 2022.
What’s more, a survey from TechTalk found that 46 per cent of UK workers consider outdated technology to hinder their overall productivity. Software and processes that are no longer fit for purpose can be the cause of unnecessary headaches for HR and payroll teams, leading to increased stress and damaging productivity.
Therefore, it comes as no surprise that we are seeing Faster Payments becoming more widely adopted by businesses around the UK and the world. Not only do they align more closely with the quick delivery timescales we’re accustomed to in other aspects of life, but they remove some of the rigidity surrounding traditional payroll processes.
With more and more employees wanting increased flexibility about when and how often they are paid, Faster Payments provide payroll teams with the increased agility needed to respond to this ever-shifting working landscape.
Ultimately, this will also make a positive contribution to business productivity and efficiencies, while also helping promote employee wellbeing.
Modern business is a complex business
We are seeing innovation and change across all areas of business – from IT to marketing, customer experience to delivery. The wider impact of the COVID-19 pandemic has also seen a seismic shift in the way many workers approach their working week, with numerous companies recognising the benefits of flexible, hybrid working styles.
Modern business has become more complex than ever before, with a growing need for efficiency and agility to align with this ever-shifting landscape. If we consider some of the complexities facing payroll teams (both pre-and post-COVID), such as a payroll mix, variable payroll patches, high onboarding or attrition, or new policy changes such as furlough schemes, it’s clear that better flexibility is needed.
The rise of the gig economy, emergency payments and shift working also adds layers of difficulty for HR and payroll colleagues across all industries, but more so in those hit hardest by the pandemic such as hospitality, retail, healthcare, and leisure.
Focus on wellbeing is stronger than ever
As well as the more complex working landscape we’re operating in, there’s also more and more focus on employee wellbeing, and payroll plays a central role in helping promote this.
Financial wellbeing can contribute to areas including presenteeism, absenteeism and retention; and the cost of the implications of these issues is a significant outlay for payroll and HR.
Financial security and flexibility help ensure overall wellbeing and pay plays a crucial role in this. Prioritising your payroll function and how flexibly you can pay your employees will pay dividends in the long run, resulting in a more motivated, productive workforce who have good financial wellbeing and understand they work for a company that places this at the very heart of their business strategy.
Faster Payments go a long way in alleviating the pressures placed on payroll teams that are still using outdated processes and increased innovation in the payroll space is a simple but effective way of increasing business efficiencies, saving businesses time and money and promoting better employee wellbeing.
The question is: Why aren’t more companies considering them?
-
Investing3 days ago
7 Tips to Start Your Retirement Planning
-
Trading4 days ago
FBS Financial Market Analysts Forecast Gold Prices to Rise to $2,800
-
Finance4 days ago
Bandit Network’s Points SDK and Brave Ads Power Astar zkEVM’s Quest Platform “Yoki Origins”
-
Banking4 days ago
The Role of Geopolitical Tensions in Shaping Digital Banking’s Future in Emerging Markets