January 26, 2021 – There are many occasions in life where employees might require a verification of employment and/or income, such as applying for a mortgage or lease. The responsibility of fulfilling these verifications falls on the employer and has become a routine facet of business operations. As a result, expedited employment and income verifications have become a desirable employee benefit.
Employer Human Resources and Payroll Departments have the ability to produce the required data to fulfill these verification requests. However, the volume and detail expected can be time-consuming and an administrative burden. Outsourcing this function to a company dedicated to automated employment verification can increase efficiency, reduce liability, and provide a valuable employee benefit.
Key employment and income verification questions
Before outsourcing your employment and/or income verifications-related services, ask yourself the following core questions to make sure you understand how it works and confirm that it’s a good fit for your company.
1. What elements can factor into the decision to outsource income and employment verification?
The decision to outsource income and employment verification can include a range of considerations, including employee demographics and behavior, overall economic conditions, and your current digital infrastructure. But two of the biggest elements to think about are the size of your business and where your employees work.
Manually crafting a verification letter from a template every time an employee requests one, followed by additional actions necessary to complete the verification, might not impose much opportunity cost on a small organization with only a few employees. However, large enterprises can face significant revenue loss when departments redirect their focus to tasks that are likely to arise — but do not create residual value for the organization.
For example, the majority of tech companies, including large software developers, are allowing their staff to work from home indefinitely because of COVID-19. Subsequently, their employees are buying homes in droves or renting places to live in locations that are further away from their original workplaces. As a result, these tech companies have seen major surges in income and employment history requests as these workers move, because the employees need those verifications to have lenders, landlords and property management companies approve their mortgage or rental applications.
Working remotely has the potential to increase time on the job and, therefore, productivity and revenue — a 2019 study from Airtasker showed that remote workers work 1.4 more days per month than people who toil in the office. Additionally, companies might save some money if they reduce their office space to accommodate the smaller number of in-person workers they now have. Even so, the costs associated with the enormous number of verification requests likely will cancel out the benefits of the extra employee hours and the optimization of real estate. A reduced-cost or cost-free employment verification service thus is more important now than ever before as part of a larger corporate cost control strategy.
Employees and employers both benefit from having human resources and payroll departments process employment and income verification requests as soon as possible. Quick processing means that employees can move forward with their personal or professional plans in a more timely way. For example, fast processing can mean that an employee is able to get their mortgage approved (or close on a rental property) and enjoy better living conditions that much sooner. The human resource and payroll departments also do not get overwhelmed with an excessive workload, so they can focus on their intended purposes (e.g., general human capital management, recruiting).
2. What is involved in the employment and income verification process?
A drain on efficiency is not the only risk factor when trying to handle large volumes of employment and income verification requests. The verification process contains multiple steps and considerations that pose unique risks:
- The complete background verification process can take anywhere from 2-14 business days, depending on the employee’s situation and the verifier’s needs. Factors that influence how long the process takes include missing data, additional verifier questions and how busy the department is.
- Complexity and location of data. Individuals and organizations that receive employment and income verification documents can have differing data requirements. For example, a landlord might be satisfied verifying current employment and annual salary to satisfy their rental guidelines. However, some programs, such as Public Service Loan Forgiveness, require more detailed information. This data might be siloed in several internal systems based on employee work history, architectural changes to the business, or other factors. Professional verification services can get a faster and more accurate match.
- Internal controls and information security. Handling employment and income verifications in-house can result in multiple departments being involved in the process and having access to sensitive information, which could present a major security risk. By outsourcing and standardizing this practice, you might be able to limit the liability of releasing secure data.
To increase business value and opportunity, outsource employment verification, income verification and other payroll services as needed
Large enterprises face significant upfront investment and ongoing operating costs by continuing to process verifications of employment and income internally. By outsourcing verification services, companies can divert these funds to more core operations and value-add processes, such as investing in new infrastructure or strengthening product management with additional testing. The result can be real growth in key areas and improvements that will bear fruit now and into the future.