Blockchain technology has been the talk of the town for the past few years. Apart from being the backbone of cryptocurrency infrastructure, this decentralized ledger technology has also had a positive impact on financial transactions’ security. From energy to life sciences, insurance, and public services, blockchain is projected to have a profound impact on a multitude of sectors over the coming years. Especially payroll, the HR space will not be left behind either.
Let’s walk together and look at six ways blockchain will change the SMB payroll process.
1) Fraud Proof and Fault-Tolerant
In payroll processes, mistakes can be costly. Fraud – especially from a data breach – is also a possibility, but blockchain could help eliminate these two major worries for small businesses. The good thing about blockchain is that it ensures great security and protection from external hackers and internal fraudsters. Its immutability will help minimize the risk that sensitive payroll information could be tampered with.
2) One-Stop-Shop and Accounting Automation
Blockchain is literally a one-stop shop for small businesses when it comes to automated accounting. Being a ledger system, it will provide a hub of all the data regarding payments to employees. This is not to forget that payroll processing will also be cheaper since bank fees and charges from other middlemen will have been eliminated. With an accurate log of transaction history available, reconciliations will potentially be reduced as well.
3) Blockchain and HR
Small business human resource departments will benefit from blockchain in many other ways apart from improved payroll processes. For instance, blockchain technology will soon help improve accuracy in recruitment processes. With this tech, there will be little room for errors when it comes to verifying certificates or conducting background checks for job prospects.
HR teams who deal with international employees will also profit from smart contracts to improve payroll administrative tasks. Moreover, the tech could help enhance transparency between workers and their remote employees, who could be small businesses abroad.
4) Implications for Financial Services
Financial service providers could benefit greatly from blockchain technology. For instance, currency exchange complexities can be easier for international organizations to navigate when paying remote teams and freelance employees. Workers in the gig economy will enjoy faster and smarter payments, minimizing cash flow woes and payment delays. Especially if smart contracts are implemented, on-demand payments could be possible in the freelance world despite time-zone differences.
5) Better Control of Records, Payrolls, and Expense Reports
When running a business, flawless record-keeping is a huge necessity. A lag on payroll can cause a huge bout of anxiety to your employees, possibly leading to productivity decline and inefficiency. Thanks to blockchain technology, wages can be remitted faster and securely via digital means. When it comes to record-keeping, companies can still issue physical paystubs in this futuristic system. All you need is a reputed pay stub maker to help generate pay stubs online for you or your employees. With this approach, it is easier for you and your employees to keep track of payroll information like total wages, the hours worked, hourly rates, deductions, taxes, and everything in-between.
6) The Future of Digital Currency (e.g. China’s E-CNY)
From the look of things, there is a possibility that many countries will issue central bank digital currencies (CDBC) as legal tender in the future. Some countries have actually started the process, with China’s E-CNY being a good example. If you’ve heard of the People’s Bank of China’s fiat currency, e-CNY is its digital version. In the US, the Digital Dollar debate is still ongoing.
Governments and central bank players are looking into ways to solve the common concerns surrounding blockchain, including the possibility of fraud, cyber security issues, tax evasion, and impact on financial stability. Crypto and other digital currencies could become a great form of global payments, but the central banks’ limitations need to be addressed first.
