Payroll is one of the most appealing targets for cybercriminals, involving as it does the large transfer of money between institutions whilst being susceptible to hacking due to outdated technology and manual practices.
Whilst cloud-based solutions such as those offered by a new breed of start-ups such as Papayaglobal have helped to avoid data breaches by blocking the data gaps and loopholes offered to hackers, many companies are still updating their payroll tech stack.
One recent example of an HR and payroll service provider who suffered a cyber attack just a couple of days ago is Kronos. The company went through a major ransomware attack forcing it to take its private cloud services down.
What are the challenges with payroll security?
Payroll has long been a vulnerable part of a company’s financial system, as historically whether run by finance or HR it has been a function that has lagged behind other departments with regards to tech uptake and has been slow in accepting changes.
Whilst running an accurate payroll has been a key concern (companies know they need to pay their employees the right amount of money), of lesser concern or priority has been data security.
In recent times, FinTech companies have ramped up the offering of automated solutions across a range of finance functions but when it comes to the process of payrolls, things haven’t changed. Companies are still doing the work according to outdated manual practices, using excel and email.
Payroll departments work with a lot of data fed across several spreadsheets. Some companies use various software suites to process the data, but the problem is those numbers are entered manually.
Manual processes come with several vulnerabilities. Firstly, as the data is entered manually there are often human errors. These errors can cause issues for the company ranging from compliance to that harming trust and credibility between the employer and the employee.
The second vulnerability is that with a manual payroll, a clear and secure channel for transferring data is absent. Hackers can do phishing attacks by creating similar pages. They would take advantage of the back and forth of data that takes place between the company and client or between company and employee when it comes to payroll.
The issue gets more complex when the company has overseas employees. The global payroll becomes even more complicated when done manually as it involves multiple currencies, tax codes, reporting styles, etc.
The way forward
Choosing advanced technologies and innovation, it was only a matter of time before start-ups saw the potential in automating payroll. Similarly, companies have begun embracing SaaS technologies. They are easy to install and use, whereas companies are more reluctant to add resource-heavy on-site services that take time to implement and are hard to sync with the accounting software.
The new automated solutions are cloud-based and are built to integrate with the company’s existing financial and accounting platforms in a hassle-free and seamless way. Furthermore, these solutions are licensed based which adds to their convenience. If the companies don’t like the services, they can stop the renewal without too many issues.
For too long payroll has been a necessary but underfunded company function, with smart saas solutions automating payroll now is the time to move your payroll processing to the cloud while applying proper security measures.