ZenPayroll opens up its platform, promises efficiency through removing back office data silos

By Michael Carney , written on October 23, 2013

From The News Desk

Modern software is all about interoperability and eliminating data silos, according to ZenPayroll founder Joshua Reeves. Today the founder and his company are putting their money where their mouth is, launching a payroll API that could allow their software to create a more connected back office. And with more than $150 million in annual payroll flowing through ZenPayroll today -- that’s up 50 percent in the last two months -- the news has the potential to make a big splash.

“All data flows into payroll – hours worked, vacation time, tips, bonuses, commissions, reimbursements, etc.,” Reeves says. “But today, this data is re-entered manually multiple times each payroll cycle, resulting in wasted time and a ton of frustration.”

At launch, ZenPayroll will have nearly a dozen software partners committed to the platform, many of which have already created integrations including: Vend (POS), Expensify (expenses), WhenIWork (scheduling), NimbleSchedule (scheduling), Deputy (time tracking), BambooHR (HR), Namely (HR), Xero (accounting), FrontDesk (Business Management), Bench (bookkeeping), BackOps (HR/Accounting)and others.

“Our goal was to work with best-in-category companies that shared our philosophy of offering modern software, which we think means great UI and UX, mobile support, and interoperability,” Reeves says. “We architected ZenPayroll from day one as an API, and have essentially been our own first customer since launching at the end of last year.”

With these integrations, a business owner will no longer be required to manually enter basic data like each employee’s hours worked, vacation days taken, and reimbursements due when processing payroll. All of that data will automatically populate at the end of each payroll cycle. It seems so intuitive, that it’s staggering it wasn’t possible previously.

Reeves believes that payroll is the natural hub of the back office based on the fact that it’s the only system that touches both the “people side” and the “dollar side” of the business. This means that data from across the company is required and that ZenPayroll’s platform can close the loop, so to speak, in the way that businesses manage their operational data.

Beyond adding efficiency, these integrations present new opportunities in the way a business can operate. For example, a business that connects its POS system to the ZenPayroll API could seamlessly create performance based compensation tied to how many sales each employee makes. Previously, doing so would be cumbersome and cost-prohibitive, as this data would need to be exported from the POS and either manually entered into a company’s payroll system or, at best, imported as a CSV spreadsheet. Today, ZenPayroll is making possible the famous Apple “it just works” experience.

Legacy payroll competitors like ADP, Paychex, and Intuit would be hard pressed to offer a similar experience, according Reeves. “They couldn't just add an API. They would need to re-architect their platform from the ground up,” he says.

ZenPayroll isn’t charging anything to those wishing to integrate with its API. The platform is entirely free to use, for both its customers and potential software partners.

“We’re not choosing favorites, we’d prefer to let the customer do that,” Reeves says. “And we already have incredible retention, so it’s really just about improving the customer experience.”

ZenPayroll raise a sizeable $6.1 million Seed round upon its graduation from Y Combinator’s Winter 2012 class. The company’s backers, many of which are also its customers, include household VC and Silicon Valley founder names. The company’s SaaS-based product is priced at $25 plus $4 per employee per month up to 10 employees, with additional employees priced at $2 per month thereafter. This means that a company of five pays $45 per month, and a company of 10 pays $65.

Prior to ZenPayroll, managing payroll was either time consuming, expensive, or both. Even in the case of a small business, calculating taxes and managing regulatory compliance at the local, state, and federal level can be a near-full-time job. This often means hiring a dedicated bookkeeper or external accountant to manage this process. Enterprises, on the other hand, are forced to deal with lumbering and costly legacy systems like ADP, Paychex, and Intuit.

Neither Reeves, nor his co-founders Edward Kim (CTO) and Tomer London (CPO), are accountants or have payroll industry experience. Rather, they are experienced founders who have felt the pain of running a small business firsthand. They set out to modernize the payroll experience from this perspective.

The founders made a number of strides in this direction leading up to today’s announcement, including moving payroll to the cloud, automating tax filing, offering employees online access to their payroll history, adding support for contract workers, and introducing its accountant-focused backend dashboard. Today, the company took perhaps its biggest step to date into the future by making its platform fully interoperable with the rest of the back-office software stack.

ZenPayroll is only available in select states at the moment, including California, New York, Texas, Florida, Washington, and Illinois. But even in these limited markets, it is able to serve 40 percent of the American population. The company expects to reach 10 states by year’s end and offer nationwide support followed by expansion into Canada by early 2014. This rollout is a non-trivial process with each new market requiring ZenPayroll to spend a significant amount of time mapping out and then automating the various regulatory and tax considerations for each municipality and state so that its users don’t have to.

Payroll is one of those unfortunate realities of operating a business that isn’t going away. But that doesn’t mean it can’t evolve from arcane solutions that have barely changed in last several decades.

“Modern, intuitive, end-to-end software experiences are the future, and connections between systems will make your life better,” Reeves says. “Our core value is ‘don't optimize for the short term.’ It’s taken us a bit to get to this point, but we’re really thinking of this as a multi-decade journey.”

[Image via Viofante]