Exclusive: Wagepoint targets Canada's small firms with AI payroll

Much of Canada's small-business economy is still in the early stages of digitisation, and this gap is creating a major opportunity for fintech firms focused on the country's smallest employers.

Founded in Toronto, Wagepoint provides payroll software designed specifically for small businesses with fewer than 200 employees. The company now employs roughly 180 staff, the majority of whom are based in Canada.

Ben Richmond started as CEO in August of last year after previously spending more than a decade at accounting software company Xero.

Originally from New Zealand, he worked for Xero around the world, eventually becoming the company's Managing Director for North America. Richmond says working in Canada has always drawn similar comparisons to New Zealand.

"I see a lot of similarities between New Zealand and Canada. Both countries are used to being the smaller partner up against the bigger brother at times - used to punching above their weight," he said.

"The interesting thing with both Canada and the U.S., however is that Canada's small business software space, particularly when you think about accounting and payroll, has lagged with cloud adoption."

According to Richmond, millions of Canadian businesses remain reliant on manual or semi-manual payroll processes despite the availability of cloud software designed to automate the work.

"If you take one-to-20 employee Canadian small businesses, there are about 1.05 million of them. Only about 35 per cent have actually digitized payroll," he said.

He argues the issue is partly structural. Many software products used by Canadian businesses were originally built for the U.S. market and adapted later for Canadian organisations.

At Xero, Richmond learned that it's important to think global from day one, but that scaling properly in the home market from the get-go is what gives stability for a wider launch. 

"Canada often has to deal with technology thrown over the fence from the U.S. as an afterthought," he said. "I think a lot of technology companies jump out of Canada way too quickly. Often, Canadian small businesses have either had to deal with large company tech that's not tailored for them because companies have rushed up market, or tech that's been built for other country and sort of hacked into their market."

He added that there is so much opportunity in the company's home market that Canada will always be the focus.

AI integrations

Internally, Wagepoint is using AI tools to accelerate software development and automate operational tasks. Externally, the focus is on improving payroll accuracy and compliance.

One new feature currently in testing uses AI to scan payroll data and identify anomalies before payments are processed. The system can flag issues such as incorrect overtime calculations, missing deductions, or potential compliance problems triggered by changes in employee location.

The technology is currently being tested with a small group of customers and is expected to roll out in full later this year.

The company also provides integrations with other software providers like QuickBooks and 7Shifts, enabling businesses to connect specialised tools as they grow. 

Looking ahead to next year, Richmond says his hopes are for Wagepoint to run payroll end-to-end on mobile and for continued innovation in meaningful AI integration.

"For us, it's 'where does the Small Business play?' 'Where do they want to use these tools and making sure that we show up in the right space for them?'"