Set Up Your Payroll Disaster Recovery Plan. Now.
Eynat Guez| Mar 15, 2023
Yesterday, the story came out that Credit Suisse’s stock fell by 5%. This news comes following the Swiss lender’s announcement in February that it had a full-year net loss of 7.3 billion Swiss francs (around $8 billion).
This, together with SVB’s crash (and the other bank failures that followed), is creating a lot of nail biting about what could still come: banks shutting down, companies losing access to their funds, and employees going unpaid. Is it 2008 all over again?
But looming banking disaster or not, companies should always be prepared for the worst – and while you’re building your contingency plans, we’re here to remind you that a payroll disaster recovery plan must be a part of it. A big part, in fact – after all, payroll is most likely your company’s biggest expense and most significant liability.
In this post, we outline quick and effective ways to make sure you can make payroll, no matter what.
In the case of a payroll team disappearing act
Whether your entire payroll team ends up on an island like in an episode of Lost, or quits en masse as happened with Twitter, finding yourself without a payroll department and with no backup solutions to speak of might sound fantastically dystopian, but – it happens. Today’s topsy-turvy financial world offers no guarantees of security.
Still, there are a couple of things you can do to mitigate this risk and its possible repercussions.
One is ensuring you’re constantly communicating with your employees to assess their satisfaction levels at work. Remember – in Twitter’s case, the exact opposite was true. Investing in workforce management tools and employee experience is one major way companies overcome this challenge.
With that being said, more than communication is needed. Sometimes you may face budgetary constraints or other problems more related to hard numbers (or lack thereof).
In this case, to avoid a parade of pitchfork-toting employees, you’re going to want to turn to a third-party vendor to pick up the slack – not to mention the compliance problems you’ll be getting into for not making payroll on time.
Keep in mind, though; you need to choose a vendor that is well-versed in global compliance and understands the ins and outs of local regulatory ecosystems to deliver salaries to employees on a global scale.
In the case of corrupt data
Data corruption refers to the incorrect handling of data, leading to incomplete or inaccurate information being stored. The problem doesn’t end here, though. There’s also data downtime, which refers to a period of time when a system, service, or application is unavailable because of data-related bugs.
For payroll, data corruption or downtime can translate into delayed payroll processing, inaccurate calculations, compliance issues, and data loss. Regular backups and a solid verification process are ways to get around these problems.
Your best bet, though, is to have reliable payroll software in place that can answer all the issues above. And, even more importantly – a software equipped with data validation mechanisms, such as AI-powered validation engines.
One more thing: be sure to choose a vendor with a demonstrated track record to handle payroll data on a global scale.
In the case of security breaches
Security threats are a constant concern for payroll operations. Payroll data is a prime target for hackers, and it’s common to see up to 60% of global businesses reporting cybersecurity breaches to their payroll operations.
There are a number of steps companies can take to keep payroll security threats at bay. These include training employees on best practice security measures and regularly conducting security assessments.
Additionally, it involves relying on payroll software with high-level security standards.
Banks are often seen as the go-to for top-notch security when it comes to finance. But this isn’t always the case. For various reasons, top-tier banks are out of reach for many companies, which means they often settle for banks with less secure systems. The best option, though, would be to rely on fintech solutions that are equally secure as established financial institutions.
To ensure this is what you’re getting when you partner with a third-party vendor, don’t skimp on your KYV (Know your Vendor), including evaluating legal and regulatory compliance, operational capabilities, and of course, security and data protection.
In the case of payment pains
Finally – there’s the actual payment and the top priority obligation of making sure it lands in your people’s bank accounts.
If there’s one thing we’ve learned from the SVB mess, it’s that even relying on an established bank is not enough to ensure you meet payroll.
As you read this, many companies that held their deposits in SVB are desperately searching out loans to ensure they make payroll on time. You don’t want to be in that situation.
To stay out of those woods, make sure that in addition to having a trustworthy bank at your side, you’re choosing a global payroll provider that can step in, in case anything goes wrong. One that streamlines and unifies your payroll AND payments under one roof – allowing the flexibility that comes with using virtual wallets. A vendor that is also able to quickly set up multiple connectors with more banks in case you need it.
A traditional global payroll vendor isn’t enough to ensure you have the proper support in all those situations. You need a global payroll partner that offers a tech-first end-to-end solution with payment capabilities embedded into its platform.
In other words, you need a Payroll OS.