A Concise History of Payroll
While the rise of payroll started as early as the 14th century, the process of actually getting paid in the early days was less than ideal.
Based on your employer, it could take weeks, months, or even years to receive your payment, and deductions could be made by employers without cause, meaning workers could be in perpetual debt. Few laws governed compensation.
Why Traditional Payroll systems don't fit a modern workforce
The growing economy is fueling the desire for workers to be paid faster and on time. After all, the service they provide is also fast and readily available. However, the gig or on-demand economy tends to deal with widespread but small amounts of money, which makes payment via traditional methods fee-intensive and cost-prohibitive. Precisely why the conventional payroll process isn't an excellent fit for the modern-day economy.
Majority payroll processors charge a per-employee or per-check fee, in addition to the base account fee. Though the fees vary from one provider to the next, a business owner can expect it to cost anywhere from $20 to $100 per month, plus an additional $1.50-$5.00 per payroll run for each employee.
For instance, a single Uber driver who wants to be paid every day could cost a business upwards of $35 in payroll fees each week. Multiply that by the millions of drivers who work for Uber, and it becomes a huge financial implication.
Those outsides of the gig economy are also interested in bucking up the payroll process, which makes shifting towards modern with the market's needs imperative for companies to stay relevant.
How do payments work in the Gig economy?
In the gig economy, on-time payments mean that employers give their employees faster access to their money. They're like Uber for paychecks.
Thanks to modern technology, businesses can pay their employees daily if they want to. With flexible software platforms, it is not necessary to adjust an existing payroll process, sign on with multiple third-party providers, or connect APIs to offer a payment solution.
The excitement around efficient and cost-effective payment solutions are, it speaks directly about the importance of the financial well-being of employees, which is vital for every industry and all types of workers.
A startling 78% of full-time workers live paycheck to paycheck. If an unexpected cost arises, or if bills are off-kilter with a payment schedule, the cost of being poor is painful. Workers in this situation incur, on average, $1,000 per year in late and overdraft fees as they wait to get their next paycheck before paying bills.
An Employee Financial Wellness Survey, conducted by PricewaterhouseCoopers (PwC), explains how widespread financial stress is in today's world. Responses from 1,600 full-time employees show that:
- 59% of workers worry about their finances
- 64% of millennials said they feel stress about their finances
- 45% said their finance-related stress had increased over the last 12 months
Not only are these stresses impacting employee mental health, but they also translate into workers calling in sick more often, being less productive when they are at work, and filing a higher rate of insurance claims against their employers.
The flexibility of being paid on time helps address the root cause of stress and in turn, makes for a happier employee and a more productive workforce.
Who can help you simplify payroll management?
It's easy to get caught up in your everyday business functions and lose sight of your payroll management process. Many companies don't realize how much time and money ineffective payroll management is costing them.
But what can you do if you lack the in-house resources to properly manage HR tasks—on top of tackling your core business functions?
This is where getting some outside help makes sense. Platform management can help you simplify complex HR processes like payroll management.