Blockchain technology has been talking about it in recent years. Besides being the backbone of the cryptocurrency infrastructure, this decentralized ledger technology has also had a positive impact on the security of financial transactions. From energy to life sciences, insurance and utilities, blockchain is expected to have a profound impact on a multitude of sectors over the coming years. In particular payroll, the HR space will not be left out either.
Let’s walk together and take a look at six ways blockchain will change the payroll process for SMEs.
1) Anti-fraud and fault tolerant
In the payroll process, 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 advantage of blockchain is that it guarantees high security and protection against external hackers and internal fraudsters. Its immutability will help minimize the risk that sensitive payroll information can be tampered with.
2) Single window and accounting automation
Blockchain is literally a one stop shop for small businesses when it comes to automated accounting. Being a general ledger system, it will provide a hub for all data regarding payments to employees. Keep in mind that payroll processing will also be cheaper since bank charges and other intermediary fees will have been eliminated. With an accurate log of transaction history available, reconciliations will also potentially be reduced.
3) Blockchain and HR
Small business human resources departments will benefit from blockchain in many other ways besides improving payroll processes. For example, blockchain technology will soon help improve the accuracy of recruiting processes. With this technology, there will be little room for mistakes when it comes to checking certificates or background checks of job prospects.
HR teams dealing with international employees will also benefit from smart contracts to improve payroll administrative tasks. Additionally, the technology could help improve transparency between workers and their remote employees, which could be small businesses overseas.
4) Implications for financial services
Financial service providers could benefit greatly from blockchain technology. For example, currency complexities may be easier to navigate for international organizations when paying remote teams and freelance employees. Workers in the odd-job economy will benefit from faster, smarter payments, minimizing cash flow issues and late payments. Especially if smart contracts are implemented, on-demand payments might be possible in the freelance world despite time zone differences.
5) Better control of files, payroll and expense reports
When running a business, flawless record keeping is a huge necessity. Late pay can cause tremendous anxiety among your employees, which can lead to decreased productivity and inefficiency. Thanks to blockchain technology, salaries can be paid more quickly and securely via digital means. When it comes to record keeping, businesses can still issue physical payslips in this futuristic system. All you need is a reputable pay stub maker to help you generate pay stubs online for you or your employees. With this approach, it is easier for you and your employees to track payroll information like total wages, hours worked, hourly rates, deductions, taxes and everything in between.
6) The future of digital currency (e.g. Chinese E-CNY)
At first glance, it is possible that many countries will issue central bank digital currencies (CDBC) as legal tender in the future. Some countries have actually started the process, the Chinese E-CNY being a good example. If you’ve heard of People’s Bank of China fiat currency, e-CNY is its digital version. In the United States, the digital dollar debate is still ongoing.
Governments and central bank actors are looking for ways to address common issues surrounding blockchain, including the possibility of fraud, cybersecurity issues, tax evasion, and the impact on financial stability. Crypto and other digital currencies could become a great form of global payment, but the limitations of central banks need to be addressed first.