SFTP, or Secure File Transfer Protocol, is one of the most common ways organizations send and receive data in bulk; but SFTP doesn’t always scale easily.
Both building new SFTP integrations and preparing the data once it’s received are time- and resource-intensive tasks. For companies that regularly receive data from customers, like 401(k) recordkeepers and benefits administrators, this translates to complex, lengthy customer onboarding and the need to constantly grow internal teams to keep up with manual processes.
To grow effectively, these companies need a faster, more scalable way to onboard new clients and more internal automation to keep the team lean and efficient.
Traditional SFTP integrations aren’t scalable because they’re difficult to implement and come with a host of manual processes. Relying on this method can limit your company’s ability to grow and hinder your profitability.
In short, without a scalable SFTP strategy, you risk falling behind in growth, competition, and customer satisfaction.
SFTP has been the industry standard for accessing payroll data for years, but it’s difficult to scale because each connection is unique to one client—the work is not amortized over time. And because the format of the data you receive varies from payroll system to payroll system, it’s difficult to build automation on top of the files you receive. Instead, someone has to manually normalize and process the data. For many companies, that means hiring to keep up with the work, which also doesn’t scale.
The most common challenges companies face when trying to scale SFTP integrations include:
SFTP is still a secure, reliable way of delivering data in bulk. The challenges lie in creating the initial connection and processing the data once you receive it. Unified APIs are tools that can take SFTP to the next level—they can reduce onboarding time to minutes and standardize data from multiple sources, making it easier to automate routine processes.
Unified APIs can be implemented via a direct API integration to the provider; but they can also be used to power SFTP connections for companies that don’t have the development resources to build an integration or that prefer receiving data through files instead of directly ingesting the data into their core system.
It works like this: the unified API provider has 1:1 API integrations with each HRIS and payroll system your customers might use. The data is pulled from each system, standardized into a uniform format, then delivered to your SFTP server as a file. Each file contains identical formatting, so your team doesn’t need to normalize the data, and you can run automations that will take much of the manual work off your team’s plate so you can work more efficiently.
Below are a few of the benefits of using unified APIs to scale your SFTP connections.
In a typical SFTP setup, you need to work with the customer and their data provider to configure a custom file for routine transfers. Each provider has different setup requirements, implementation timelines, and costs, meaning each employer must go through the implementation individually—a process that can take as long as 18 weeks.
To make SFTP integrations truly scalable, you need a way to apply a single setup process to multiple employers, so the same work doesn’t need to be replicated with each new customer. In this scenario, there’s a single connection between your company and the data source that can be used for every client that uses that provider.
Unified API providers enable this through their direct integrations with the providers. Rather than creating custom file formats for every new customer, you can use pre-built connections with their HRIS or payroll provider to access the specific data you need, all without assuming the liability that comes with accessing the system yourself. No more months-long back-and-forth with the customer and provider—onboarding takes just a few minutes, regardless of the employer’s system.
You can not only save operational and technical resources for higher-priority work but also create a winning customer experience right from the get-go.
Each HRIS and payroll system has its own data format. Processing the files you receive via SFTP requires someone on your team to manually translate that data into the format your company uses—a cumbersome process that introduces the opportunity for human error and that must be repeated with each new batch of data.
Scaling processes requires eliminating tedious busywork like this. Unified APIs standardize data across providers automatically, meaning each file you receive through the SFTP server matches an identical format. This way, you can cut down on hundreds of hours of manual labor.
The key to scaling operations is automating as much as possible, so your employees can focus on complex or strategic tasks, rather than simple, rote labor.
It’s possible to build automated processes on top of traditional SFTP workflows, but there are risks involved since the connection is fairly rigid. Non-standardized data can create Not In Good Order (NIGO) errors, and if the HRIS or payroll provider makes a change to their underlying system, it could completely break the automated workflow as new data arrives under a different field name. As a result, this “automation” still requires a ton of manual effort, both to ensure everything has been read correctly and to troubleshoot errors as they arise.
SFTP connections powered by unified APIs eliminate much of this risk by delivering standardized data. They also act as an abstraction layer, so your organization is shielded from the ongoing maintenance of keeping up with unplanned or unexpected changes made by the HRIS or payroll systems.
For instance, if you're a 401(k) administrator, having the right automation powered by accurate, consistent, and timely data will help you auto-enroll employees into specific plans and quickly determine plan contributions. The benefits of this automation will trickle down to other departments, from sales to product to customer success—resulting in improved products, faster processing, and fewer errors—boosting your organization's overall efficiency.
In highly regulated industries like retirement and employer-sponsored benefits, you’ll likely still need some checks and balances to ensure everything runs smoothly. The difference is that it’s more of a safeguard, as opposed to constantly monitoring automated systems for failure.
“If we were 100% relying on manual work by our Operations team to process payroll data, we would not have a sustainable business."
Learn how 401(k) provider Human Interest uses automation to process payroll 4x faster.
Without reliable automation, processing employer data is a manual task. That means that as your business grows and you bring on more customers, you’ll need to hire just to keep up with the corresponding workload.
This solution isn’t cost-effective. It incurs both overt costs like salaries and benefits as well as hidden costs like time to onboard, employee attrition, and so on.
Automating your routine processes provides a twofold benefit: it allows you to work more efficiently, and in turn, that allows you to keep your Operations team lean and focused on the tasked that can’t be left to technology. Inaccuracies in payroll data—whether from the employee or employer—are inevitable, but automating routine work allows your team to focus on identifying and remedying those outliers to provide the best possible sponsor experience.
Scaling SFTP integrations can be much easier with modern solutions like Finch Flatfile. Flatfile, now in beta, delivers all the benefits of a unified API, including automated delivery and standardized data formatting, without any upfront engineering investment or ongoing maintenance.
Flatfile offers several benefits over traditional SFTP integrations:
If you’re looking to scale your SFTP connections, contact our sales team to learn more about our supported providers. You can also learn more about Finch Flatfile here.