Payroll Infrastructure in web3

There are many crypto companies out there right now saying they “offer payroll.” But that’s not quite accurate. What most of these companies actually handle are payments, or getting funds from A to B. Payroll, on the other hand, is a complex financial operation that involves much more than just moving funds from one place to another. We at Franklin thought it would be helpful to break down what really happens when companies run payroll:

The above is an overly simplified version of the elements that go into a payroll process. In reality, payroll is not moving from A to B, but A to B, C, D, E, F, G, etc. And each one of these payment splits is unique to the employee depending on where they live, the location they work at, withholdings designations, benefits/investments selections, and more.

The problems web3 companies face with payroll are numerous: regulatory ambiguity, volatile transaction costs, unique tax implications, ever-changing exchange rates, and recipient user experience. Many crypto financial operations managers patch together a vast web of tools and tricks to try to keep their teams compliant while also utilizing the assets readily available to them on their balance sheet.

Furthermore, traditional payroll processes are also fairly time consuming. Most fiat payroll processors exclusively use ACH, which locks capital for long periods of time. Here is an example timeline of how cash moves through a popular payroll tool for U.S. based startups:

In this example for the mid November 2022 payroll cycle, it takes 7 days for cash to be fully processed. If we are generous and only count business days, it takes 5 days. Locking cash for this amount of time is capital inefficient for companies, but many still decide to sacrifice that for the sake of eliminating complexity.

The near instant settlement times of blockchains greatly reduce the lead time required for executing payroll when compared to ACH, but the flow of funds must be carefully accounted for. Franklin’s mission is to solve this problem by providing compliant, capital-efficient, and easy-to-use payroll tools for web3 companies. We do this through a combination of:

• Custom smart contracts which enable payments splitting,
• Payroll oracles to generate accurate calculations for each company and employee, and
• Pay stub & tax form generation.

Franklin enables companies to pay their employees, contractors, and vendors in a mix of both crypto and cash. Crypto payments can settle instantly, or be streamed out over a period of time. Cash processing takes 2 business days.

To learn more about how to run a U.S. compliant crypto payroll, reach out to us at contact@hellofranklin.co, or follow us on Twitter, Linkedin, here on Medium, or our website.