Over the past two decades, electronic payroll systems have become pervasive across North America.
Yet for many smaller firms the technology remains inflexible and costly.
PayMentEvolution Corp. has sought to change that.
Recently the Toronto firm launched an online service that promises to remove the complexity of payroll management and drastically reduce the cost of the technology for smaller businesses.
“We are taking the headache out of payroll management at little or no cost at all,” said Sam Vassa, managing director of PaymentEvolution.
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PaymentEvolution offers many of the same services provided by established companies such as ADP and Ceridian.
However, it does so at a much smaller fee and allows users to tailor the service to their needs, Vassa said.
For example, while leading payroll firms might charge as much as $50 per employee, per month, PaymentEvolution actually offers its services at no charge to firms with five or fewer employees.
Organizations with six or more workers pay $18 per month, with no extra charge for additional employees.
Businesses such as accounting firms that provide payroll services can also use the service for a $14 per client per month fee.
In all instances, Vassa said, there are no time limits for use of the system, no limits to the number of payments or transactions, and no system update fees.
The system works on a role-defined model that can be customized by an administrator to enable specific payment modes and specify deductions.
This element of online interactivity is largely neglected by many other systems, according to Vassa. “It’s what small businesses want, a small predictable flat rate and greater flexibility.”
Potential PaymentEvolution customers would be small companies that want greater control over their payroll processes at a lower cost.
They would also include firms offering payroll or payment services to other small and mid-sized outfits and entrepreneurs.
Flexibility – the name of the game
Flexibility and interactivity were precisely the features Todd Trowbridge, partner at Trowbridge Professional Corp., http://trowbridge.ca/ sought in an online payroll system.
The Toronto-based chartered accountant firm with 15 employees handles payroll and tax services for small and mid-sized businesses, incorporated professionals, as well as U.S.-based firms with expats working in Canada.
To provide these services and handle its own payroll, Trowbridge used the services of a large payment firm.
“They were good at their work but we found them inflexible,” Todd Trowbridge said.
Payment processes and document layouts were largely determined by the payroll firm, he said. Customizing the service even a little was “cumbersome and difficult.”
For instance, Trowbridge wanted to have his company’s stamp on the payroll service when he offered it to clients. The large payroll firm would not oblige.
Being a smaller company, PaymentEvolution was more entrepreneurial, he said “It was more of a partnership between us, and they helped us customize the service and offered it as a white brand, which we could market on our Web site.”
Trowbridge was among the more than 100 companies that have been trying out PaymentEvolution for several months now. The company intends to roll out the service to clients and employees sometime next month or early June.
PaymentEvolution stores client data in three data centres spread across the country and run by online hosting firm Endless Communications Inc. For added redundancy, PaymentEvolution also employs additional data centres and services of Amazon Compute Cloud.
The company’s data privacy policies ensure client data remains the property of the customer. PaymentEvolution does not sell or aggregate the data and users can retrieve or transfer data to another provider at no cost.
There are typically three main payment methods.
Some firms still pay workers in cash or by physical cheques. Others have moved to direct payment, depositing salaries directly to an employee’s bank account.
More recently companies have adopted electronic fund transfers. Vassa of PaymentEvolution said this is similar to direct deposit, but workers get their money the next business day after they receive a notice of payment from their employer.
However, both direct payment and electronic fund transfers require the employer to “pre-fund” an account by as much as 15 days before the release of the money to the employee, said Vassa.
“That means 15 days before the actual payday, the business must have some money in the bank to cover the salary. For many smaller businesses this is a big burden,” he said.
Vassa said PaymentEvolution aims to move towards a mode of electronic funds transfer that enables employees to collect their salary in a variety of forms (bank transfer, ATM or even Visa-type fund cards) within minutes of receiving a payment notice from their employer.
A hybrid model.
PaymentEvolution is targeting an underserved market and it’s a very good strategy, according to Darryl Humphrey, Edmonton-based senior manager at auditing and financial advisory firmDeloitte & Touche Canada LLP.
Most people do not actively manage their salaries and finances because there are just too many disconnected steps involved, he said.
“Making the pay slip interactive provides a one-stop-shop for financial management by the employee,” Humphrey said.
Large payroll specialists such as Ceridian and ADP typically handle timesheet management, payroll calculations and payment transfers.
PaymentEvolution offers a hybrid model where users can “reclaim” some of these functions as in-house processes and reduce their cost.
Humphrey said cloud computing, along with infrastructure-as-a-service (IaaS) and software-as-a-service (SaaS) technologies are making the payroll management easier to handle for non-technical staff and reducing costs.
“The cloud lowers the barriers to new entrants in the payroll processing market.”
PaymentEvolution’s use of a micropayment model (free to companies with less than five employees and lower flat rate fees) means that the company hopes to attract businesses that will eventually grow to become high volume users.
The company, he said, can also offer an attractive revenue stream for businesses seeking to white brand the service and enter into a revenue split or reseller arrangement with PaymentEvolution.