Making the Connection Between Payments and Payroll
Jan 10, 2019 | Topic: Optimization
While it’s common for people outside of a company’s payroll and payments departments to think they are one and the same, the reality is that the two functions are typically kept separate. They may even live under different branches of the organization, with payroll commonly operating as part of human resources and payments falling under finance.
Unlocking the full value of both functions, however, requires greater alignment and a deeper understanding of the supporting role each can play for the other. A closer connection between Payments and Payroll benefits both teams, as well as their customers, by boosting efficiency, accuracy, and performance. Looking long-term, such a connection helps to better position organizations to adapt to future requirements, opportunities, and workforce needs.
Although payments and payroll focus on two distinctly different aspects of getting employees paid, they share that primary goal and responsibility. The Payroll team collects and processes the data to determine which amounts go to employees, taxes, and contributory funds, and the Payments team moves money according to those calculations. One can’t function without the other, and the employee needs both.
The disconnect between Payroll and Payments has led to very practical frustrations over the years, the impacts of which are felt more acutely as the workforce becomes increasingly mobile and technology-enabled. A recent survey of more than 15,000 companies operating international payrolls analyzed their experience with global payroll and payments providers, as well as their perception of what’s possible, and found that more than half experience failed payments on a monthly basis.
- 57% of payroll professionals experience returned or failed international payments every month
- 60% say local payment requirements are the most common problem
- 73% of payroll administrators are unable to upload a single, automated, multi-currency payroll file
- 79% of teams were unaware that a single vendor could deliver cross-border payroll globally
- 42% scored their current solution between 1 and 5 out of 10 in assisting with payment issues
While the organization and separation of the Payroll and Payments functions varies across companies, the reasons for the disconnect are consistent and generally stem from a lack of understanding of the unique concerns and requirements of Payments.
Regardless of where it sits within an organization, Payroll is more closely related to Human Resources in terms of the personal employee data it handles and the fact that compensation, withholdings, and contributions refer to agreements made during the hiring process. Conversely, Payments is a treasury function, falling under the domain of Finance and concerned with quite different data and processes.
As organizations grow and expand into more countries, the complications and costs of facilitating payments are rarely considered in advance. Consequently, legal requirements are not always understood, and companies often find that their existing solution or method of making tax and contributory payments doesn’t work in their new location, regardless of the sophistication of their payroll system. Such issues further divide the two functions, when a closer connection is what’s needed.
In this special report on Understanding Payroll Payments, you’ll improve your understanding of the crucial connection between the two functions by exploring three key areas:
- Challenges of maintaining divided functions
- Impacts of separate systems on organizations
- Solutions of an aligned global platform