Finch Expert Interview - Keely Aguayo

Finch Expert Interview - Keely Aguayo
Finch's Diana Liu sits down with payroll expert Keely Aguayo to talk payroll trends heading into 2023
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The payroll landscape is constantly evolving, and staying on top of emerging challenges and budding trends is imperative, if not exactly easy.

Recently, we sat down with Keely Aguayo, a nine-year payroll veteran and Finch’s own payroll and benefits advisor, to talk about what’s new and next in the space. Having worked in payroll leadership positions at some of the most exciting and fast-growing companies, she offered tremendous insights on post-pandemic complexities, reporting shortcomings, and more that we didn’t want to keep to ourselves.

Diana:
Great to chat with you today. As a quick intro to the audience, my name is Diana Liu. I’m the first business hire at Finch and currently work on product and channel partnerships. I am incredibly excited to interview our resident payroll expert, Keely, about all things payroll today. Keely, would you mind giving a quick intro about yourself and your background, as well as what you're doing at Finch?


Keely:
Sure. Hi, everyone. My name is Keely. I've been working with venture-backed startups to manage payroll, benefits, and compliance for about nine years now, and I am currently advising Finch on all payroll and benefits needs in relation to their product.


Diana:
Awesome, thank you so much for that intro. So, you've had a chance to do payroll for some of the most tech-forward companies in HR tech. I'm really curious to know – what are some interesting trends that you're seeing? What are some of the biggest improvements that you've been noticing over time?


Keely:
I remember when I first started doing payroll, you had two options. You either went with basic ADP or you went with Paychex or QuickBooks payroll. There weren’t a ton of options out there, and it has been so interesting, almost mind boggling, to see how many new players have come into the market to do payroll and benefits, or one or the other, or HRIS. There are so many names out there that are doing this really well.

I would say the biggest trend that I'm seeing now is rather than just being a payroll provider, providers are now trying to be an all-in-one solution. They want to manage payroll, they want to manage benefits, they want to manage compliance, they want to be able to do all your state filings, help you with registrations, help you really hire these distributed workforces that are becoming so common these days in the tech industry. And it's been really great to see. Obviously, some companies are doing it better than others, but it's so great to know that there are so many options out there now for people to look at when they're looking for a new payroll benefits and compliance provider.


Diana:
I'm also really curious, do you see any high-level or major differences between providers that service primarily SMBs versus enterprise employers?


Keely:
No, I feel like the provider that works best for a company is very much company-specific. And what that means is, what is their priority? Is their priority a pretty HRIS system that can have all the functionality that they need? Is their priority, "Look, we have a really complex payroll system. We have three different payroll cycles. We have to figure this out. We need a payroll system where the payroll module needs to be super functional." Or maybe it's just, "I don't want to do anything manual, so I want to make sure you are currently integrated with all of my benefits providers, 401(k), health—that it's an all-in-one shop."

And so, it really depends on what the company is looking for, because it's very hard for these payroll providers to do all of it well, right? They're going to concentrate on one section of what they offer. Some of them have an amazing HRIS system, but their payroll's really manual, or it's lacking, or it's not as up to date as some of the other providers on the market. Whereas some others really concentrate on the payroll side of things. Maybe they started out as a payroll provider, and they moved into HRIS, but they weren't able to make their HRIS as functional and as great as their payroll. So, it's really company-specific.


Diana:
That makes a lot of sense. And I'm now thinking about my previous company, where, when the pandemic happened, people were allowed to start working remotely and they moved all over the place. I'm really curious to hear, what was your own experience managing payroll throughout the whole pandemic?


Keely:
It has definitely been a struggle for a lot of companies. I was remote prior to the pandemic and actually worked with a lot of remote companies, so it was a little bit easier for me to jump in. I knew the nuances. I knew how registrations were going to work, how filings were going to work. I knew that organizations would need to put in some kind of formal process for moves and whatnot. A lot of companies struggled in 2020. I worked with one company—they had 400 people in New York in 2020. At the end of 2020, they had 42 left.

Where did these 350 people go? Yes, some talked to their managers, some put in formal requests with HR, but some didn't say anything until they got their W-2 and were like, "Oh, so sorry, we actually moved across state lines. Can you correct us?" That’s a huge burden on not only the company but the payroll provider, and it's a huge cost, because to redo filings and regenerate forms and that kind of thing is both time consuming and very costly. So, it’s important to put a process around what that looks like but also, from a company standpoint, deciding if you’re going to allow it. Is this just something you are allowing for this year? Is this something you’re going to allow going forward? If you don't allow it, what does that look like?

So, it was a big struggle, and a lot of companies did not do well with it, while others did really well with it. It depended on how you approached it, how much you were on top of it, and what kind of information you provided to the employees. If you didn't tell them that they needed to communicate things, or you didn't give them a way to easily communicate things, it definitely caused a lot of struggles.

I would say the most I've ever seen companies struggle was early 2021, and it was really just fixing filings and W-2s and getting things straight and finding out where their workforce actually was. A big one was obviously if they changed countries, that's huge. “What are we going to do? How are we going to support this?” On the international side, there's a lot of players that have come onto the market since the pandemic started—new payroll providers that work in 120 countries and manage your entire workforce. And that is a byproduct of the pandemic and the issues it caused with US-based companies.


Diana:
I'm really curious to get your take on employers of record, or EORs. I feel like a few major players have popped up in the last few years, as you've mentioned.


Keely:
EORs are great, obviously, for companies that have a few employees in a particular country but are not at the point where they are able to open up a legal entity there. The EOR stands in as the legal employer in those cases and takes care of all the regulated aspects of employment like payroll, taxes, and benefits.

As with anything, some EORs are great, some are not so great. You can run into issues. EORs are very costly. At what point does it make sense to create your own entity? And I think that's where a lot of companies are struggling now. Maybe the EOR worked when they had less than five people, but now that they have 20 people in the country, does it make sense to open an entity? Does it make sense to offer benefits? What would that look like, and what would be the cost? So, I think EORs are great for what they do, but having 20 or 30 EORs can be a little too much for a company to manage.


Diana:
I'm wondering, even with all of these changes, what do you think are some current pain points that still exist today?


Keely:
I would say the biggest pain point I see in payroll systems is reporting. I find most payroll systems still lack in their quality of reports, the ability to customize reports, and the ability to have a bank or general report storage that encompasses everything an organization can need.

The way most payroll providers fix this is they do custom reporting, but that can get really confusing and it can be really hard to get the information you need. And then, when auditors come in, insurance providers come in, 401(k) providers come in—maybe you're acquiring a company or you're raising your next round of funding—it can be really difficult to give everyone all the information they ask for.

I would say another thing that comes into play a lot is integrations. My prior company had about a thousand employees. Our payroll system did not integrate with our benefits provider, and that required manual uploads on both ends every month to make changes.

That can be a lot of work for companies but it's one of those things that's like, "Who do we want to partner with? We're not going to integrate with everyone." Maybe you like your benefits and don't want to rock the boat with your employees, but you need a new payroll system and have to decide if you can take on the manual work. And that's where you're seeing a lot of payroll teams within an organization getting very granular—where it's not just enough to have a payroll manager anymore. Now you need the payroll specialist, you need the payroll coordinator, you might even need a director of payroll. And a lot of it has to do with payroll systems not being able to be this true source that they claim to be.

Diana:
Sounds like painful manual work to have to update the deductions from payroll to 401(k) every month. Integrations are exactly what Finch provides and this is the exact problem that we're trying to solve. I'm wondering if that's potentially why you decided to start working and advising at Finch.


Keely:
I really liked what Finch was doing, and in my first conversation with Ansel I thought, “Why aren't more companies using this backend integration to be able to pull the data that they need?" That's really what attracted me to Finch. I like that it's still like a scrappy startup. They're building something that others are not. They're really trying to build a solution that works with payroll providers and benefits providers. It's not just a one-bucket thing. And honestly, the team's great. I am so happy to be here.

Diana:
This might be a bit of a spicy question, but I'm wondering, what are some product improvement opportunities or suggestions that you have for Finch or the Finch product?


Keely:
It's very hard to get in the mind of these benefits and payroll providers and be able to support every single deduction and contribution they have. Another byproduct of the pandemic is that you are seeing so many more fringe benefits offered by companies—that is, all of the perks, benefits, and stipends that, in addition to salary, add up to someone’s total compensation package. Things like wellness benefits and employers paying cell phone bills and offering work-from-home internet stipends are all examples of fringe benefits. Those have been gaining traction over the years, but since the pandemic, it has gotten crazy. These things are expected by employees, and every payroll system and HRIS system does it differently. So, some may word it this way, some may word it that way, some may limit how many you can have. So, it's very hard for any one product to be able to pull every subset of data without being the engineer and the product team on the other side of the table.

On that note, I've had some really great client calls since I've been at Finch, and I do see the product going in that way, and I love the idea that we are able to customize it to an extent. I had a recent client call where they had 180 different deduction codes, and I was like, "There's no way we can pull that many data points." And we did an amazing, eye-opening mapping exercise where it was like, "Yes, the Finch product can pull these data points. This is just what it's going to look like. And then these are the ones we can't do, but let's ask questions and see how we can make it work for you." So, I love that the product's still at that phase where we can really customize it and that we're moving that way. But there are also limitations, as in all systems.


Diana:
That is great feedback for our product. Thank you for that. I know the product operations team, which you're part of, has been working really hard at researching how to make our product more robust. I would love to know, what are some upcoming projects that you're really excited to work on here at Finch?


Keely:
I'm actually going into these payroll and benefit systems, researching the capabilities there, and then going back to the product team and telling them, "Okay, this is what it looks like in this system. This is what we would need to do on the Finch side to be able to pull the data that XYZ company is asking for." So, that's really exciting.

We're also building out playbooks where we are going to have a specific set of instructions and all of these cool videos for each provider that we work with that we will eventually be able to use in our sales pitches. Like, "Hey, we work with another client that uses this system,, and this is what we did for them, and this is the data we can pull.” I'm really excited about that and building out those products that will help Finch grow.


Diana:
That sounds like some really impactful and detailed work. That's amazing to hear. It's been really great chatting with and learning from you, and I deeply appreciate the time.

Keely:
Thank you for having me, Diana.


This interview has been edited for clarity.