The role of the payroll outsourcer is changing in New Zealand. Inputting and processing data is no longer enough, and firms are looking to find new and innovative ways to streamline these tasks in order to spend more time on advisory and client value. Warick Heads, National Director of Payroll Services at Findex, tells us how his team remains relevant with the changing landscape and continues to bring value to clients.
Findex is an accounting and advisory firm serving over 250,000 + clients across Australia and New Zealand. With 3,000 employees and 110+ offices in Australia and New Zealand, Findex’s New Zealand payroll outsourcing team runs payroll for over 450 clients and processes up to 900 payrolls in any given month across New Zealand.
It's important to do advisory. You've got to walk the talk; you can't just do the payroll and then just wash your hands of it. We’ve been in the industry a long time, we've got some very experienced people who add value to the overall client payroll experience through advisory services.
We're also involved in payroll reviewing and advisory around the Holidays Act. I've completed a number of audits across large enterprises of around 1500 to 2000 employees: councils, health boards and other large employer organisations. We educate employers and provide webinars across New Zealand through Wolters Kluwer Asia Pacific.
As an outsourcing solution, you can't just be a processor. You need to have an advisory offering. That's where we add value to a client’s overall payroll experience with Findex. The real value is not just in the processing or input of the numbers.
With payroll becoming more and more automated, and integrations from various HR providers, it's imperative that to remain relevant in the industry, you embrace the changes, adapt, and provide added value solutions.
The better the technology, the more time you have to spend doing the valuable stuff.
When companies are processing their payroll, they've usually got an administrator that has limited exposure to all facets of payroll, legislation, dealing with complex leave calculations; and they have often been thrust into that position by default.
The risk to employers is directly proportional to how well their payroll is processed through experience and expertise.
Our guys are touching everything when it comes to payroll; they might be processing 5-10 different payrolls in a day. Whereas if you're working in a company, just doing the same one payroll day-in-day-out, you may not cover all aspects. Most in-house payroll people rely on the software. Every bit of software has bits and pieces that it can do and can't do, and you really should rely on good knowledge and skill of the administrator rather than the software alone.
There are a lot of employers out there that will just be using software off the shelf because they see it as a cheaper option. A - they don't want to spend the money; and B - they think they can do it in-house with greater effectiveness.
But what they don't realise is it's going to cost them in the end, because employees are getting a lot smarter. They know the legislation. They know that there have been issues with the Holidays Act, and so they're always questioning their pay now.
Payroll is often the last thing that gets looked at, yet it's one of the most important parts of any business. Employers must look after their employees and pay them correctly.
I believe there's a definite place in the market for payroll providers in terms of training and outsourcing. You’ve got to get payroll right. You don't get any second chances.
With COVID-19, this brought new challenges in terms of wage subsidies, but also when businesses went into lockdown, their payroll administrator lost the support of the team around them. Business owners have started to realise that outsourcing is an option to reduce various business risks.
It's a bit ambiguous. It's not just black and white, and that's the problem with the legislation: it's open to interpretation. Unless people actually understand the legislation, it’s a real struggle. We've got access to employment lawyers and other people that interpret the act, (tax specialists), so it’s not such a problem for us.
The challenge is around those employers that often work outside of the Act in terms of what they're giving their employees. HR decides what they're paying an employee and there'll be all sorts of allowances and different things created, but they don't talk with payroll, or actually think about how that's going to work in payroll.
People expect you to pay their employees what they want and quite a lot of employers will not care about the Act even when you give them advice around compliance. We tell them it isn’t compliant, but it's challenging because you can't change those people's minds.
It’s the employer’s responsibility to be compliant - not just the outsourcer or provider - but of course at Findex we provide a duty of care and maintain compliance.
Not in the payroll that I've seen. A lot of the software doesn't work in weeks and days; a lot of it works in hours. That complicates things.
There are always workarounds you need to do to make sure you’re calculating leave correctly, but you shouldn’t have to do that, and not everybody knows how to do that as well.
The Act’s got to change for a start.
Payroll software really just has to pay people correctly. I think the Act hopefully will someday simplify the calculations. It's a bit complicated with the current averages, what gets included and excluded from gross earnings, and the treatment of leave.
Never. Not at the start. But I'm a big believer that it can be done. I've also got to see it being done properly, and I haven't yet.
Data output is only as good as the people who put in the information. It's the whole garbage in garbage out sort of scenario. People need to know how to test the payroll data, and if it doesn't smell right, they need to know why an employee is getting paid differently to the standard.
There must be a reason behind it, so payroll administrators need to know how to look behind the scenes: have they correctly set up the allowances or the deductions, are they correct, or has KiwiSaver been included? All those sorts of little things that a lot of people won't worry about and think about are automated in the software.
ESCT rates are a good example for KiwiSaver. A lot of software will have them calculated based on what the gross earnings is for the employee for the year because you only change ESCT rates once a year. But, what happens when an employer drops their hours or drops below one of those tax levels? You've got to know to go and manually change it as opposed to being done automatically. Software doesn't tend to do that. Little scenarios that are outside the norm need to be tried and tested.
Cloud based products are obviously the future - that's the way to go. COVID-19 and business lockdowns will also make cloud-based software more popular for businesses.
I remember the old days when you had to put in multiple floppy disks to update your software. The employer had to be responsible for the updates, but with the cloud-based software, it's all done for you.
Again, employers need to know that the software is secure. Protection of data is important too. Privacy is obviously important when it comes to payroll data - you can't have that leaked.
Employers have to have some confidence in the cloud-based product itself. I have noticed a number of cloud-based payroll systems entering the New Zealand market, and they do become popular for those people who recognise that the future is online, and cloud based.
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