Getting the payroll process right is important for any business. In addition to being the primary driving process behind how employees receive their salary for their work, a correctly executed payroll process can help protect your business against any labor or payroll compliance problems or issues.

According to Fit Small Business, the payroll process, “consists of the steps needed to pay employees each period, and involves tracking hours worked, deducting money for employee benefits, and remitting payroll taxes. Establishing a solid payroll process helps employers avoid penalties for breaking Department of Labor laws (minimum wage, unpaid overtime), and payroll software makes it easy.”

Business owners need to ensure that whoever is handling payroll – whether it’s themselves or an HR rep – are capable of handling the process and are knowledgeable about what rules, regulations, and other facets need to be considered.

What’s involved in the payroll process in HR?

The payroll process in HR has several steps that are similar across businesses.

1. Collect time records

One of the most important steps in calculating and distributing payroll is to collect time worked by employees in order to calculate how much they’re owed by the business. Some businesses calculate this by using paper cards or electronic timesheets, but both are valid methods for ensuring that HR teams have what they need to accurately assess payroll. For non-hourly employees, HR teams need to know the salary pay as well as any PTO time that needs to be deducted. Hourly employees need to have any overtime, time and a half, or other non-regular hours calculated.

2. Calculate pay and deductions

Every individual employee will have their information calculated to include hours worked, salary owed, and deductions. Deductions, such as benefits, taxes, and insurance that need to be taken out of every employee’s paycheck, are almost as crucial as the pay itself, as they play a big role into employer compliance.

3. Pay employees

When hours, rate of pay, deductions, and other elements have been tracked and accounted for, employers can successfully pay their employees through whatever method required by the state or business – physical check or direct deposit is being the most common.

Additionally, keeping payroll records is an important part of the entire payroll process in HR, from the timecards to the employee exemption records to tax deductions and payroll stubs.

One way to handle the payroll process and avoid any compliance issues is to invest in an HR or payroll process software.

Benefits of software solution for the payroll process in HR

Some of the benefits of using an automated software solution for the payroll process in HR include:

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If you work in the payroll accounting department, a robot wants that job. There is a major disruptive trend of robotic process automation (RPA), which is being applied to routine, repetitive tasks performed by humans. Many think of manufacturing processes as the obvious place to deploy robotics. However, RPA in payroll processing is just as effective in replacing human effort in many repetitive accounting functions, such as payroll processing.

A payroll pay cycle is an event that is defined by calendar dates and rules. The input needed includes the data about human beings to pay, the tax calculation information, and a mechanism to verify the hours worked for workers paid on an hourly basis.

RPA in HR and payroll processing are new innovations; however, the adoption of RPA for payroll processing is moving forward rapidly. The Institute for Robotic Process Automation reports that RPA already has an impact on about 40% of back-office administrative functions for enterprises.

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Benefits RPA in payroll processing

Here are some major benefits RPA in payroll processing creates for many organizations:

1. Improve Process Efficiency

RPA is far less susceptible to errors that human beings make while doing the same work. RPA processes payroll functions according to the rules. The only vulnerable area for introducing errors is if the rules are not entered properly and not updated when the rules change. If the rules are accurate and updated as necessary, a payroll processed by an RPA system may approach 99.99% accuracy, which is far superior to human efforts.

2. Lower Payroll Costs

Executive management sees payroll processing as a necessary function since they need to be paid by the system as well. However, the payroll process does not contribute added value to the business. Therefore, payroll departments are usually working on low budgets to keep the cost of payroll processing to the minimum.

One solution many businesses employ is outsourcing the payroll function to a service. If the outsourcing company uses human beings to do payroll processing, there are still significant opportunities for human errors. Moreover, there is a security risk for the exposure of confidential payroll data to a third party.

The current best practices are to use an RPA system for payroll processing. This improves process efficiency, keeps confidential information in-house, and lowers costs at the same time.

3. Machine Learning Using Artificial Intelligence

An RPA system does more than simply process the payroll. It becomes possible to analyze the data and uncover useful insights to help maximize workforce resources. Unplanned events, which disrupt the pay cycle, are used as machine learning inputs for artificial intelligence programming. This helps improve responses to similar events in the future.

4. Better Regulatory Compliance

Businesses may operate in different jurisdictions within one country as well as may employ workers in multiple countries. Keeping with regulatory changes that modify payroll processing is a complex endeavor for a human being. An RPA system is rule-based. The parameters of the rules can be adjusted at any time. This makes compliance with regulations far easier to manage than relying on human expertise to follow all the complex regulations and changes.

5. Easy Deployment of an RPA System

Even though an RPA payroll processing solution may handle complex global payroll for multi-national corporations, an RPA system is easy to deploy. There is no need for custom software coding or IT infrastructure changes. The investment in RPA solutions for payroll processing is modest. There are SaaS offerings of these solutions available on cloud networks.

6. Automatic Error Correcting

One thing that has the potential to waste plenty of human work time, is the error correction of data records. RPA excels in automatic error correction that requires no human intervention.

An example of this error correction methodology might occur for a worker at a U.S. location that starts as a new employee. If the new employee data is entered in the system with an address that does not contain the proper zip code, the RPA system automatically checks the address.

The RPA system uses the master list of all known U.S. Postal delivery addresses to find the correct one. It changes any mistake in how the address is formatted and adds the correct zip code to the file.

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