Payroll Integration is sort of like the lottery. How so? Winning the Mega Millions lottery sounds great. Even after the government takes its cut, the hundreds of millions of dollars that you get is enough to never have to worry about money again. Managed well, the funds you won overnight could keep you and your family financially stable for generations. It’s no secret though that winning the lottery is not all it’s cracked up to be for many people.
In fact, according to the National Endowment for Financial Education, 70% of lottery winners declare bankruptcy after only a few years. I’ve never won the lottery, but I would guess there is a lot more work involved in managing the money you won than expected. Apparently, it’s so much work that it almost seems better to have never won the lottery. Daydreaming of all the things you could do with hundreds of millions of dollars is a fun mental break, but as a business/restaurant owner, you have little time for such distractions.
Time is the ultimate resource, and finding ways to save it is invaluable. Setting up a payroll integration between your Point of Sale (POS) and your payroll software seems to promise a life of simplicity and automation, but will the work involved in the setup be more trouble than it’s worth? Before starting the integration setup process, you should know what integration is possible, what goes into maintaining the integration, and what kind of backups need to be in place.
The types of payroll integration
The first thing to consider is what kind of integration is possible. In the payroll world, integration is the process of getting two houses of data communicating, so that you do not have duplicate or data redundancy issues. For example, your POS is operated by Company A, and your payroll software is operated by Company B, with a payroll integration, even though they are different companies, the data in Company A’s system gets sent to Company B’s payroll software. If the flow of data is only going from the POS to the Payroll Software, it is called a 180 payroll integration, but if the data can be sent both ways, it’s called a 360 integration.
In a 360 integration, the data housed in each system gets updated when you make a change in either. In a 180 integration, where the data flows from A to B, you need to be conscious of where you make updates to be sure the right data gets used. The 360 integration is superior, but as long as you understand the limitations of the 180 integrations, it can be just as helpful for automating your payroll entry.
What data is being transferred through your payroll integration?
Another thing to note is the exact data that will be transferred between the systems. A 360 integration that only sends the hourly rate for your employees, and no other information, between Company A and Company B is not as helpful as a 180 connection that can transfer all data from the POS to the payroll software. Each integration will have unique limits on what it can and cannot do. The more you understand what is happening between the systems, i.e., what fields are getting mapped together, the more equipped you will be to maximize the integration.
A common misconception is that all payroll integrations are seamless or as easy to set up as sticking magnets together. Realistically, setting up a payroll integration is more like sewing two pieces of fabric together. Instead of a needle and thread, you are mapping fields of data. The more varied and complex your payroll is, the more advanced the stitchwork will need to be to make the connection functional. When you choose to use an integration, knowing the options you have and how the data moves will give you a leg up in the setup process, but the work isn’t done yet.
Maintaining payroll integrations
As the only person with full access to both pieces of software, the majority of the responsibility for integration maintenance falls onto the employer. It’s important to understand that while Company A and Company B have possibly worked together to make integration possible, the people who work at Company A are not experts on the product or services of Company B, and vice-versa. This means that a lot of troubleshooting and implementation falls onto the employer trying to integrate the two pieces of technology. Another potential curve ball is that Company A might release an update that causes the communication to no longer work the same, or maybe Company B might decide to develop its own POS, so it will no longer support Company A’s integration.
For this reason, even when you have a 360 integration, you must still log in to each system to ensure the data transfer runs smoothly. You will need to stay on top of software updates, patches, and releases from each company. You will need to become an expert in each system and know the framework of the integration to pinpoint the cause of issues and find solutions. Imagine it this way: when you use integrations that promise to work automatically without any effort from you, it’s like believing you can win the lottery and never worry about money again. In reality, just like lottery winners need a plan to manage their newfound wealth, these integrations often require monitoring to ensure success.
Payroll integration backup
The final consideration when choosing an integration is making sure there is an adequate process in place for verifying data transfers. First, you need to make sure that the correct data is in the proper spot. This includes verifying that hours and dollars are recorded to the right employee, labor distributions are mapped to the correct department, and earnings are properly attributed. Additionally, make certain that none of the system’s usual checks and balances are being bypassed or overwritten. This involves confirming that all employees have the correct hourly rate, earn at minimum wage, and overtime calculations are accurate.
At the end of the day, it is the responsibility of the employer to ensure that the wages they pay their employees are correct and in compliance with the Department of Labor regulations and laws. In case the integration between Company A and B experiences any issues, it’s crucial to locate the problem as swiftly as you can. Trusting the integration to do everything correctly every time can leave you liable to lawsuits, fines, and penalties.
Payroll integrations make more sense when you have help
Think of using an integration as like riding a bicycle to get to work. The greater the distance to your workplace or the more hills you encounter, the more essential your cycling skills become. Likewise, if you have to manage various earnings, distribute tips through a tip pool, or handle different pay rates for different jobs, your computer skills will be put to the test. There are numerous other time-saving solutions available for you to explore. If you are curious about alternative options, reach out to your payroll company to inquire about the solutions they offer. While it’s true that these solutions might not always align with your expectations, remember that life’s biggest wins, like winning the lottery, rarely unfold exactly as planned either.
However, at Whirks we understand change to be more than just uncertainty; it’s an opportunity for growth. Our goal is to equip you with the essential financial resources and expertise so you can concentrate on the “why” – the passion behind your business – while we navigate the intricacies of the “how.” If you’re ready to embrace change and grow your business, schedule a call today. Additionally, check out this resource to learn more about alternate solutions, The Power of Bundling Payroll, HR, and Insurance Services for Your Small Business.