Top 9 Use Cases and Benefits of Payroll Automation in 2024

Payroll management refers to the administrative task of calculating and managing employee salaries, wages, and benefits to ensure timely payments in line with local and international regulations. Traditionally, enterprises designate payroll clerks or a team of payroll specialists led by a payroll manager to execute such tasks. Also, HR or finance/accounting teams carry the responsibility of payroll management in many enterprises.

Automation technology is transforming business functions worldwide. Payroll management, in its essence covering many repetitive tasks, is one of the business processes that enterprises prefer to streamline with automation software. 

What is Payroll Automation? 

Payroll automation is the practice of streamlining payroll management services, such as tax filing, salary and wage payments, recordkeeping, etc., through automation tools to optimize the efficiency of the process and reduce the time spent on repetitive tasks. As the professionals in the HR or Finance/Accounting departments implement payroll management, automation reduces their responsibilities and allows the employees to allocate their time on strategically more critical decisions. 

Can payroll be completely automated? 

The answer to this question is both yes and no. While payroll management tasks can be fully automated, there is still a need for a payroll specialist to monitor, overview, provide the system with information and updated plans. Automation tools can cover various payroll management tasks. The following are the top use cases of automation in payroll:

1. Timekeeping – It is a significant factor in assessing the performance of employees. Businesses use timekeeping to store information regarding the duration of employees’ projects. Automation solutions, such as WLA and RPA can monitor employees’ access to the payroll platform, record their access times, and create an audit trail for further analysis and auditing.
2. Timesheets – an automation solution can collect clock-ins and outs of the employees by aggregating data from the login platforms. The software also detects discrepancies with time cards and asks for the supervisor’s approval before payment.
3. Overtime compensation approvals– The automation tools request supervisor’s approval, records overtime in the employee’s performance database, and adjusts the compensation data accordingly. 
4. Commissions – An automation software can adjust the salary or benefits according to the performance of the employee in performance-driven jobs where an employee reaches a pre-defined success metric.  The software calculates commissions based on the commission rules, such as the duration, target, etc., input by the enterprise. 
5. Approval based tasks:

• Garnishment Order processing –  Garnishment order is the court order in favor of the plaintiff looking to collect money from the defendant. The automation tool processes the garnishment order and requests approval from the manager. While this may look like a rare case, in fact, according to the ADP report, 7.2% of US employees had their salaries garnished for different reasons, including child support, loans, and student debt. Garnishment order processing allows payroll managers to streamline communication with state agencies while keeping sensitive data secure.
• Employee advance and repayment processing – with the help of the employee self-service (ESS) feature, employees can request their advances through the software and get approval from their managers. The software also tracks the date of the advance and the repayments.

6. Recordkeeping – The automation tool automatically updates information about the employee payroll on a monthly basis.
7. Payroll reports – The software also creates the payroll reports of the employee and allows managers to streamline government agencies regarding employee tax liabilities.
8. Payroll Taxes– Automation allows the enterprises to allocate a certain percentage of the payroll to be paid to the government for taxes. As tax regulations tend to change often, it is of paramount necessity to follow the tax rates and rules. Tax automation software allows enterprises to scale their operations without worrying about the tax burden.
9. Employment verification – Many services require verification of employment from the employer. For example, an employee may apply for a mortgage or a loan. In this case, banks require proof of employment and salary. Automating does not only save time for the payroll managers but also increases employee satisfaction as normally employment verification can take several days in large organizations. 

As it can be seen from the examples mentioned earlier, every phase of the payroll management process can be streamlined by an automation tool. Implementing automation to your payroll operations will optimize and reduce the time spent on such repetitive tasks. However, the benefits of payroll automation do not finish with optimized speed.

Benefits of Payroll Automation

Human error factor – Implementation of payroll automation minimizes the human error factor from the process. According to the American Payroll Association, almost half of the US employees leave their jobs if they experience problems with their paychecks twice. It demonstrates how costly manual errors resulting from payroll management can be for a business. 

Saving money– Moreover, the report shows that businesses using a solution where payroll and timekeeping functions are integrated on average beat their revenue targets by 7%. As typically companies need more employees in HR or finance/accounting departments to execute payroll tasks, it is expensive to pay for such large teams. Sometimes, companies even outsource the payroll service. Automation saves money by requiring a smaller team and saving the company from dependency on outsourcing payroll management services. 

Fast process – Many automation software can run monthly payroll calculations in a few minutes. Traditionally, this process would take longer as the clerk would have to check the spreadsheets and manually make the necessary calculations. Automation cuts processing time nearly in every phase of the payroll management process.

Reports – Automation tools can prepare reports on different payroll statistics that help enterprises make more data-oriented decisions, monitor their cash flow, employee turnover rate and other significant key statistics. The software can prepare numerous reports, including professional tax computation reports, MIS reports, employee details audit reports, monthly payroll reports, etc. 

Data Security – Every company has the liability to protect the information of its employees. Payroll management as a process involves large quantities of sensitive data, such as salary, advances or hours worked. Transferring such sensitive data between team members through email or spreadsheets increases the chance of security breaches. Automation allows the payroll management teams to streamline the information more safely.

For more on HR and Finance automation:

• HR Automation : Top 8 Processes to Automate
• What is RPA for HR? – Top 9 HR use case in HR
• Top 14 Workload Automation Use Cases in IT, HR, and Accounting

If you have questions about how to automate HR or Finance processes of your business, don’t hesitate to contact us: