Small and medium-sized businesses may think that HR automation is reserved for larger organizations. But, nothing could be farther from the truth. For many smaller operations, adopting automation for key functions such as payroll, benefits and time and attendance technologies is one way to achieve the biggest return on investment.
What is payroll automation?Payroll can be automated using software to facilitate the collection, organization and storage of all information required for payroll calculations and regulatory reporting requirements. As part of automation, payroll data is typically collected through time clocks and time and attendance data. Often, payroll automation is integrated with the company's workforce management system to provide a comprehensive view of all workforce-related data.
There are numerous benefits to automating processes, but here’s a quick view of the top five ways payroll automation will benefit your organization.
1. Save time.Payroll automation saves time. When your employees have to manually track their time using a spreadsheet or paper form, they’re wasting valuable work time.
Similarly, when you run payroll using manual methods, it requires that someone collects, reviews and inputs the data from the paper timecard to calculate an employee's gross pay based, determines the taxes due and removes applicable deductions for insurance premiums and benefits. Once you’ve made all these calculations, you have an employee’s final net pay. Doing these calculations manually – for all employees – requires significant time.
If you adopt payroll automation, you regain valuable time for employees and payroll team members.
2. Reduce errors.Running payroll requires complex calculations. Hourly employee pay may be based on complex intervals. Similarly, deductions for federal and local taxes and benefits are all error-prone when the calculations are done manually. Many organizations also experience errors due to complex labor and OT calculations. Payroll experts agree that reducing the chance for error is a key reason to opt for automation.
“Manually keying anything into a system nowadays is an outdated practice. It is also time-consuming and prone to human error,” according to the American Payroll Association (APA). “Processes that are repetitive, time and resource-intensive, and subject to human error should be the first to be reviewed for automation.”
3. Enhance the accessibility of payroll records.When you use paper for your payroll processes, you also have to store paper copies of all that data. Onsite and offsite storage requires a significant part of your budget. You’ll invest unnecessary time and money maintaining, tracking and manually disposing of records for current and past employees.
It also makes it difficult to access the records you need promptly. If records are stored in filing boxes across your organization, you don’t have the time and attendance data you need for reporting purposes or to make business decisions.
4. Ensure payrolldata security/clean process.To say payroll data is sensitive is an understatement. The security of the information collected and administered by payroll is of paramount importance. If you’re using physical copies of documents containing personal information, you’re putting your organization at risk. If someone is processing data using pencil and paper at their desk, that’s a red flag.
Payroll automation not only removes these risks but also enhances your options for data security. With firewalls and vendor solutions that reinforce secure systems, you can be assured that your data is not at risk.
5. Provide employee self-service options.Paper paychecks or pay statements delay employees the access they need to their pay information. These paper methods are also costly and can require multiple printings if errors occur when they are processed.
Today's technology allows for payroll automation that includes employee self-service options through which employees can access their time and attendance records electronically and obtain important payroll information.
“Providing employees with access to view and print online statements, change personal information, and enroll in benefits allows companies to reduce HR/payroll administrative burdens and redirect or even eliminate resources,” according to the APA. “Implementing self-service empowers employees, giving them a sense of control knowing that they have 24/7 access to view or change their own personal data.”
Self-service options are also essential for time and attendance integration. You can enhance your payroll automation with time clock tools such as a scanner clock, a mobile app, a browser-based time clock or a fingerprint scanner. When they clock in using these tools, employees can immediately see the hours they've worked and reduce any payday surprises.
Payroll automation extends beyond the walls of your payroll function. Thanks to the integration with workforce management and human capital management software systems, companies can integrate payroll with other best-of-breed technologies. Automating your payroll processes is an important way to simplify data collection, maximize efficiencies and improve the bottom line.