Embedded payroll offers a powerful launchpad for software platforms and staffing companies. It allows them to provide an all-in-one platform experience and onboard candidates faster by automatically importing shift information from their POS system. Fintech companies, business banking services, and vertical SaaS providers that help salons and barbershops manage their businesses infuse payroll into their products. It helps them retain customers and grow their revenue streams.
A modern solution can automate much of the manual processing, which can be time-consuming and error-prone, and reduce the overhead of hiring employees to handle the work.
Additionally, many small business owners need one place to manage client bookings, transactions, employee scheduling and payroll. It can free up resources to focus on growing the business and ensure that operations and people processes are aligned and working together seamlessly.
Embedded platforms enable merchants, vertical software-as-a-service (VSV) partners and fintech companies to use its payroll API to add in-app, modern payroll products to their media. It allows them to offer fast, affordable and reliable payroll services to their small business customers, increasing their value proposition. In addition, it can also serve as a monetization engine by enabling them to cross-sell insurance and financial products like workers’ compensation or 401(k), which can provide additional revenue streams and further increase customer retention.
Embedded payroll, like ADP, is an increasingly important service for businesses that want to scale. The system’s scalability allows businesses to easily process large volumes of payroll, essential for companies that serve customers worldwide and have diverse labor laws and regulations. It also reduces costs by eliminating manual processes and reducing the risk of errors and data duplication.
Another benefit of embedded payroll is that it improves customer experience by reducing friction and simplifying the user experience. It eliminates the need for multiple logins and removes the need to copy data between systems, which makes it more convenient for staffing companies to manage their employees. Moreover, it allows them to focus on improving candidate lifetime value and providing the best service to their clients.
Payroll can be a difficult market to break into as it’s a staple product with high client retention. However, there’s an opportunity to offer payroll as a product extension within vertical SaaS platforms that have already established strong market share. This approach eliminates the need for payroll providers to build out full-service offerings and can reduce costs.
For example, contractors can easily incorporate payroll into their products by offering a single-click payment solution that integrates with their existing platform. Allows them to streamline the onboarding process and allow their customers to self-onboard and access paystubs, tax documents, and other payroll information.
Payment solutions offer this functionality. It can be infused in their business banking solution with payroll, accounting technology firms that add payroll to their UI, and time-tracking startups that empower users to track shifts and hours with automation. These partners benefit from a flexible integration that reduces upfront cash and technical debt while improving their user experience and generating new revenue.
Many vertical SaaS companies that build in-app solutions offer embedded payroll to complement their other services. It can help them gain traction in the market and reduce the time it takes to launch their product. This approach can also save money by lowering customer acquisition costs. A company offering staffing services can quickly leverage the platform to add payroll and other HR features to its software. It allows the business to focus on delivering best-in-class candidate experiences and boost its revenue. Offering embedded payroll can also increase the lifetime value of a software platform. For instance, if a company adds health insurance and workers’ compensation to its payroll solution, it can capture additional monetization opportunities and increase ARPU. In addition, the ability to monetize payroll data through lending can improve credit quality, decrease loan defaults, and increase borrower retention. Payroll information is not available from credit bureaus so it can be a valuable monetization opportunity for lenders. Moreover, lenders can reduce the paperwork they need to request from the employee by pulling the information directly from payroll.
The ability to embed payroll provides significant monetization opportunities for merchants and VSVs. It can help drive revenue growth by offering additional products like workers’ compensation insurance and 401(k) services that can be built into the payroll experience. It can also create a pipeline for cross-selling to payment products like pay cards and earned wage access. However, it’s difficult for companies to compete with direct payroll providers with high client retention rates. These high rates make it hard for new entrants to enter the market.
Embedded payroll can eliminate compliance errors that can be costly to small businesses. These errors occur when a company fails to keep up with changing regulations, which can result in expensive fines. Moreover, embedded payroll allows businesses to save time by eliminating the need for employees to log in to their payroll provider’s website. Instead, they can access their paychecks and W-2s directly in their staffing platform. Embedded payroll also helps to reduce onboarding friction for candidates by collecting and storing all necessary information in the same place.