UK-based Pento announced a $35 million Series B Round of venture capital for its payroll automation tech. This brings its total raised to $54 million. The round was led by Beringea.
Today, in our COVID/post-COVID world, having a workforce distributed across borders isn’t exclusive to large employers. Small and medium-sized (SME) companies and middle-market employers can now have teams, offices, or lone employees working from anywhere. A combination of the mobility of talent during the pandemic and the shortage of talent have increased the odds that employers that can recruit from anywere are doing just that and talent that can work remotely from anywhere probably are or soom will be. While this helps with access to talent, it increases the complexity of paying them. A complexity that is usually underestimated. Tax withholdings, local tax reporting and compliance, and internal operations and reporting stand out as challenges for those employers with a workforce distributed across country, state, provice, county, and even city borders. Nowhere is this more true than in Europe. For perspective, about 30 European countries fit within the geographic size of the US.
Pento’s solution promises to take European employers that are manually processing payroll via spreadsheets and bring them to the modern era of automation, minimizing mistakes and speeding up processing time while providing a better experience for employees and employers alike. They integrate with a handful of small business-focused HR systems to bridge data like benefits and tax info.
Back to that complexity.
The inherent complexity in payroll leads most employers to outsource. According to Deloitte’s 2020 Global Payroll Benchmarking Survey, “Organizations don’t outsource to lower
cost; it’s typically to decrease risk, avoid building the capability inhouse because it’s hard to manage, or because of technology limitations.”
The way Pento describes automating payroll it’s essentially an efficiency play, complete with a comparison chart of using Pento ” in-house” vs outsourcing. The reality is that the payroll tech and HCM suites available in market offer more of a hybrid of tech, expertise ensuring compliance, and support for internal experts and stakeholders.
Deloitte goes on to say that, “Seventy three percent of organizations outsource some aspect of payroll and while organizations are generally satisfied with their current third-party payroll providers, they believe there are many areas for improvements from compliance to technology capabilities…” We’ve seen these “many areas for improvements” vary based on factors unique to each employer.
This isn’t to say that an upstart like pento can’t or doesn’t offer an interesting solution for SMEs in Europe that need to get out of the dark ages and into modern payroll processing, It does, however, bet the SME to evaluate the reality of the complexity that may be associated with the solution they need. How many tax jurisdictions are you paying your staff within? What are the rules and regulations for overtime pay? benefits? Interim workforce regulations? How often do you need to look at pay in hindsight? How often is on demand pay relevant? How many systems do you need to integrate data in order to satisfy your internal and tax reporting needs? The list goes on and on and on.
What’s a European SME to do?
The great news for European SMEs, or SMEs located anywhere for that matter, is that the market it teaming with new modern payroll and core HR system innovators that are purpose-built for this market segment. They also normally have strengths in specific regions, vertical markets, and pay models. There are plenty of options to consider on your way to transforming payroll.
HCM payroll providers with significant SME marketshare in Europe have been rethinking their technology and platforms, innovating user and employee experience. Be sure to look at SD Worx, Ceridian Dayforce, or SAP. Rapidly emerging scaleup HCM platform Personio has announced deep payroll integration with DATEV.
For some SMEs, a relationship with an Employee of Record solution (EOR) like Papaya Global, Velocity Global, Deel.
The work tech market has been incredibly active with mergers, acquisitions, and funding rounds in 2021. $6 billion was invested in HR tech firms during Q3 alone as 2021 soars past $17.5 billion on its way through Q4. WorkTech Market Insiders get exclusive access to market data, insights, and more with a free membership.
Source: https://www.pento.io/blog-en-stories/announcing-pentos-35m-series-b
