.png)
The first major changes to payroll in decades have arrived. Find out what’s new and how to Make Money Move® with Monoova.
Payroll is a major part of any business with employees. However it can also be challenging to manage, administer and reconcile.
It’s a highly complex part of business, from calculating employee award rates, superannuation contributions, and reconciling all of that manually, it’s more often gotten wrong than it’s gotten right – 59% of SMEs reported payroll mistakes and 44% reported making late payroll payments1 from 2022-2024.
To combat this, larger businesses usually either build dedicated in-house teams that focus solely on payroll or outsource this to third party payroll companies.
When processed manually, the steps to complete payroll are the same:
- The payroll cadence is set. For the purpose of giving an example, we’ll say the 15th of the month.
- How much each employee needs to be paid is calculated, including any changes in award rates, superannuation contributions, and things like annual leave.
- The details of who needs to be paid how much and to which account is manually compiled in what’s called an ABA file.
- The ABA file is uploaded to the company’s bank account.
- The ABA file is processed according to the banks’ processing windows, restricted to working days and hours.
Current Pain Points in Payroll Payment Technology
There are two main issues with this: Opportunity for human error in the manual compilation of the file and the restriction of processing windows.
When manually compiling ABA files, there’s a high risk of human error. Whether that’s an incorrect sum, or a typo in the account number of the employee’s bank account, these small errors have outsized repercussions.
The processing window restrictions might also seem like a small inconvenience at first, but let’s go back to our example payroll date. A widely accepted practice in Australia is to deliver payroll on the last business day before a scheduled public holiday or weekend. If the 15th of the month falls on a weekend or public holiday, this disrupts a business's processes. For the public holiday, they have to pay employees early. Neither businesses nor employees want their regular pay scheduled interrupted.
If the 15th happens to be Easter Monday, payroll will need to hit employee bank accounts on Thursday the 11th. Allowing up to three business days for processing on traditional direct credit payment rails, companies would need to submit their ABA files on Monday the 8th – a whole week early.
Additional challenges for third party payroll
Third party payroll companies take on additional risk. They’re responsible for ensuring employees are paid on time, and to cover that risk they will often ask the employer to fund payroll up to seven days in advance. However, if that payment is late, the third party payroll organisation still needs to pay employees on the agreed date.
How real-time payments are changing payroll technology
Australia’s banking sector is undergoing a transformation, introducing real-time payments and greater digital connectivity.
Real-time payments, delivered through the New Payments Platform (NPP)’s new payment rails, solve the issue of being limited to banks’ operating hours. Whether the 15th falls on a Tuesday or a Sunday, employees will be paid on time, instantly..
Digital connectivity solves the human error pain point too. Instead of manually compiling ABA files, this process can be replaced with API-enabled systems and processes.
Better security for employees
There are added benefits to this, too. Employee salaries and bank details can be handled much more securely, with these details less exposed to employees who have access to company bank accounts or ABA files.
Rather than providing their BSB and account number, employees could even elect to be paid via their PayID – a unique identifier for their bank account that can’t be as easily used for fraud the way BSB and account numbers can be.
Real-time notifications for payroll teams
In the event of an error, for example an employee’s bank details have a typo in them, payment status notifications alert payroll and finance teams to a failed payment. Instead of having to wait several days for the bank to process the failed payment, and the team to notice it, they’ll get a notification as soon as the payment fails with the relevant details to follow it up.
Automated reconciliation
Reconciliation for all payment types is one of the most labour-intensive tasks for a finance team to complete. Digital-first payment systems provided by Monoova eliminate manual reconciliation, automatically completing reconciliation of payments as they happen.
In addition to reconciliation for payroll, Monoova automates reconciliation for all payments in and out. For payments in, configurable reconciliation rules can also automate processes when an incorrect payment is received.
PayTo improves relationships for third party payroll companies
As mentioned above, third party payroll companies take on the additional risk of funding employee payroll where the employer hasn’t provided sufficient funds. Setting up a PayTo agreement between the employer and the third party can be an antidote to assist with mitigating this risk.
PayTo agreements are one of the new technologies that have come out of the NPP. In this context, a PayTo agreement would allow for the third party to pull funds from the employer when it’s time to process payroll rather than waiting for a less predictable bank transfer.
See some answers to the most common PayTo questions right here.
Payday super is coming 1 July 2026
Payday super marks a big change for the way superannuation is paid. Payday super is a reform that will require employers to pay superannuation contributions alongside employee salaries and wages. The legislation to implement payday super has been passed by parliament. See the ATO information for more details on implementation and start dates.
Currently, employers can pay superannuation in a quarterly lump sum, letting them hold onto that cash for longer. For employers that pay weekly, this will be an enormous increase in the number of payments being processed – reinforcing any opportunities for human error in ABA files and increasing the risk of making a payroll mistake which may result in non-compliance with regulatory requirements.
Start preparing for payday super with Monoova for payroll
Monoova sets businesses processing payroll up for payments success. Integrate with your existing ERP, reporting, and payroll systems for a seamless payments experience. Pay employees in real time, 24/7/365.
Submit payroll and superannuation contributions in one smooth, API-enabled process that also reconciles the payments and reduces the risk of human error and mispayments.
Download our info sheet for payroll, or explore how our payments products apply to the payroll industry.
Have some technical questions? Speak to our team of payments experts!
.png)
