How technology can stop the next payroll fraud
By Robin Beauchamp, CEO, Integrated Payment Technologies (InPayTech).
The Plutus payroll scandal has been labelled Australia’s largest white-collar crime, with increasing calls for additional legislative crackdowns on those entrusted to process the pay, benefits and taxation of working people.
The alleged $165 million Plutus payroll scandal could have been avoided if employers automated payments directly to the Australian Taxation Office (ATO) and authorised taxation payments themselves, rather than relying on a ‘bulk billing’ third-party payroll company to make such payments. Only by authorising payroll payments themselves can employers eliminate the risk of such fraud entirely.
Learnings from the case highlight that payroll is a critical business function which can’t be ‘bulk billed’ without the risk of fraud. Employers need to get it right from the start.
That’s because your payroll is extremely important; it’s the reason why your employees get out of bed every day to be with you – because they get paid. Organisations should therefore keep their payroll authorisations in-house to make sure their employees get paid all their entitlements. Only by authorising themselves can the risk of fraud be entirely eliminated as it takes away the opportunity from third parties to pocket monies intended for others.
Indeed, no amount of additional laws can prevent those third parties with the knowledge, resources and criminal intent to illegally exploit existing systemic loopholes. ‘Bulk billing’ will always carry this risk.
In the Plutus Payroll fraud, the payroll company itself defrauded millions of dollars from employers, money intended for the Australian Taxation Office. While the ATO is still chasing those payments, employers remain out of pocket and liable for those payments that went missing. Trusting Plutus was a bad move. But trusting any third party can expose you to this risk.
That’s why embracing the authorisation process yourself is the safest option. There is a temptation to think the payroll process is too hard and needs to be entirely outsourced by businesses that do not have time to do it. However, this type of thinking can lead to problems. Finding the right technology can make the payroll process much easier – and much more secure if businesses authorise the payments themselves directly to recipients.
InPayTech has developed a unique payments technology, PayVu, which delivers a greater certainty for employers, their agents and the ATO as it fully automates payroll and tax payments. This solution is immediately available to every employer in the nation right now.
PayVu is like an overlay service that will sit over the top of the New Payments Platform (NPP), due to be introduced later this year. The NPP will enable businesses and government agencies to make faster payments, with near real-time funds availability to the recipient, on a 24/7 basis, so public holidays and weekends won’t slow down payments. Each payment message will be capable of carrying much richer remittance information than existing systems.
Importantly, PayVu bridges the gap between accounting and payroll systems and the ATO. The product gives time back to business owners and their bookkeepers by reducing the payment process from hours to minutes and it adds certainty to the outcome by ensuring payments are received by the intended recipients virtually on the same day they are made.
PayVu therefore eliminates the need for employers to outsource the authorisation of payments and it therefore removes the opportunity for illegal behaviour. The massive scale of the Plutus case highlights why it is so important to act now to in-source the authorisation function.
Integrated Payment Technologies Limited (InPayTech) is an Australian financial technology business that has designed an innovative overlay capability with broad domestic and global applications across banking, wealth management, pensions and financial services.
During its Initial Public Offer process and subsequent listing to the ASX on December 16, 2016, InPayTech highlighted its intention to create new business initiatives to commercialise patents approved and pending around the world. PayVu is the first such initiative from InPayTech Limited.