Paylocity Seeks to Disrupt the Payroll Industry
The payroll industry hasn’t changed much over the past few decades. On-demand payroll and direct deposit have changed the way we approach payments, but it doesn’t exactly address a current trend in the American workforce: the gig economy.
Today’s business owners have access to hoards of technology that streamline financial operations, such as balance sheet reconciliation tools, accounting software like QuickBooks, and financial health dashboards like InDinero. But they lack the ability to put payment power into the hands of their employees, especially when working with remote and project-based team members.
The gig economy consists of independent contractors and freelancers who have flexible and/or temporary jobs. Currently, roughly 36% of American workers are involved in the gig economy, and this number is expected to grow to 50% by 2027.
Paylocity aims to address the challenges that come with on-demand access, specifically as it pertains to emerging professionals and freelancers. Professionals in the gig economy expect faster payment cycles and more transparent access to those funds.
“To someone who is just graduating from college, gets a job and is told that they will be paid twice a month, that worker may think to themselves, ‘That’s not necessarily the way I live, that’s not the way my expenses come in,’” Paylocity CEO Steve Beauchamp said in an interview. “That doesn’t make much sense to them. They might have experience in college or high school working in those gigs with faster payment cycles.”
With the company’s On Demand Payment service, employees are able to access earned wages on-demand in advance. This comes at a time where within the gig economy, professionals are paid fairly quickly. Uber drivers can withdraw earnings on the same day, and freelance platforms use escrow accounts to ensure professionals are paid on time within a few days.
Slow access to funds—especially for new hires—force employees to go in another direction that may hurt them in the long-run. Payday lenders have prayed on victims in this industry, capitalizing on weak areas and gaping holes.
According to Zayzoon, an on-demand payroll provider, a quarter of employees are distracted at work because of personal cash flow issues. Currently, roughly 70 million working professionals utilize payday loans or overdraft their accounts to address those issues.
By offering more diverse payment solutions and supporting financial wellness, employees are more likely to be productive and happier. Overall, this could improve company culture and boost retention.
In the future, we can expect virtual payroll cards to further disrupt the payroll industry. Due to the proliferation of digital wallets like Venmo, Cash App, and even Zelle, we can expect more employees to prefer the utilization of those wallets for payment facilitation.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes.