Getting Paid

Automated processing of payroll checks and taxes, using the Internet and links between a company's dispersed locations

Payroll channels funds from a company's accounts to its employees and to various government agencies. Simple.

What complicates this relatively straightforward equation is the mind-boggling variations--different hourly rates and pay schedules, salary accounts, local, state, and federal taxes, bonuses, and more. In addition, payments to employees and deposits of withholding taxes must be covered by available funds. Businesses need to manage cash effectively to meet payroll obligations, which arise as often as weekly. And standards-based, secure connectivity--both internally and with third-party payroll services or financial advisors--can provide the real-time money management needed to minimize payroll costs and burdens.

Payroll outsourcing has long been a common practice, reducing administrative costs, complexity, and preserving more staff time and energy for focusing on core activities. Where do company intranets and the Internet come in? Time-clock tools can be integrated into the company network, instantly feeding payroll data to a central processing point and eliminating manual collation of time cards. By enabling companies to securely share financial information with their payroll service or CPA, the Internet permits a greater level of automation, improving the productivity of accounting and administrative personnel. And by permitting businesses to transfer funds between accounts instantly, the Internet (and secure extranet links) help optimize money management and maximize returns on floating cash accounts.

Implementing Internet-Based Payroll Solutions

Online payroll processing starts with an internal network that can collect payroll data from all locations across the business. Linking that intranet to outside advisors or payroll services via the Internet reduces administrative work, eliminates duplicated efforts, and facilitates better cash management. And integrating payroll with online bank accounts can ensure that a business has enough cash available to cover its obligations on payday, while keeping money in interest-bearing accounts until it's needed.

Clearly, providing access to sensitive payroll data over a network raises security issues. Companies should implement and aggressively enforce "physical" and data-security policies. In the physical realm, this security includes controlling access to financial offices and PCs. Data security has two principal components: controlling access and protecting data as it moves over the network. Today, numerous security standards and software- and hardware-based solutions are available for transmitting sensitive financial information over the company intranet and the Internet.

Another option for using the Internet to streamline payroll activities is to rely on an application service provider (ASP). In this scenario, the ASP builds and maintains the payroll application, and subscribing businesses pay a monthly fee to use it. This scenario reduces initial costs and eliminates the need to purchase and install upgrades, while providing easy, standardized access to data for companies and their financial advisors. A good connectivity option for businesses moving toward an ASP model for payroll services is shared, high-speed access (via integrated services digital network [ISDN], cable modem, digital subscriber line [DSL] service, or dedicated link) to the Internet.