“In the past everything was better” growled Henry McOld to Bill Fast, the new payroll administrator on his first day with McOld & Change Accountants. “In the old days our customers received something tangible for their money. Every morning I was greeted by 18 ladies typing out the payroll slips for customers in our typing room. Back in 1955 we had 5 trucks delivering the moneybags with the payslips to our clients. We knew our clients and they knew what they were paying for.”
“Oh yes, I can see that things have certainly changed a lot” murmured Bill to the old partner and founder of the company. “Don’t be fooled by Mr. McOld, son” said Max Change, the other partner at the firm. “He’s not as conservative as he sounds. Nowadays we do things quite differently, focusing on adding true value for the customer.”
Over time Payroll calculation changed dramatically, not least with the computer’s arrival. Manual calculation disappeared. Payroll service providers began to focus on entering variable transactions and printing Payroll slips and other reports. Modern payroll applications suddenly required a great deal of maintenance, expert knowledge required to operate them. Our customers knew that a great deal of work was involved in doing payroll and accepted its price accordingly.
The clients of Payroll service providers come mostly from the lower and mid end of the SMB market – companies not large enough to employ their own payroll administrator. These types of companies usually outsource their payroll administration to accountants that providing general administrative and accounting services, or to specific Payroll service providers.
Nowadays the ‘per payslip’ price a payroll service provider can ask is under pressure from competition. Administrative work is no longer considered a value-adding service but rather a necessary ‘evil’ to be done at the lowest cost possible. Software can play a vital role in this challenge for those providing administrative services. Newer applications like Exact Online Payroll offer increased process automation and are shipped with predefined collective labor agreements.
Transaction entry, as done by an entire typing department in McOld’s youth, will soon disappear altogether. The software chain now extends as far as the customers themselves. Via the internet, they can enter their information into the Payroll application from anywhere. Focus on user experience improvements also means that for entry of data in Payroll applications, payroll expertise is no longer demanded. Digital is the new standard. Paper output will disappear, following the examples set by the banking and telecom industries. Who needs paper when you can look up the info you need any time online?
Eventually administration for administration’s sake will disappear altogether. The future will only be concerned with activities that really add value to a business. For payroll services this will, for example, involve reducing sick-related absenteeism, advising on the choice between flexible and fixed labor and improving employee motivation. Bookkeeping is done in the background as a derivative of activities that you want to register.
And the future is already closer than you might think. A great share of these concepts is already possible through SaaS applications like Exact Online Payroll. Bill Fast, the new payroll administrator at McOld & Change Accountants, might find it a pity that he’ll never be greeted by a room full of smiling typists, but at least he can take comfort in his customers genuinely valuing what he does!