- what are the considerations and benefits?
Automation is changing the world of work, and a modern business is faced with the stark choice of either evolving with digitalisation or being left behind. Salary administration is one of the functions being greatly affected by automation to remove the burden associated with manual processing. According to Statista, the size of the global industrial automation market is valued at US$224billion in 2023 and expected to reach US$265billion by the end of 2025.
Even so, there are a great number of organisations – especially small and medium scale enterprises – which are yet to fully automate or acquire such software to improve their operations. This article discusses the considerations for payroll administration with such benefits in migrating to an automated system.
An automated payroll system refers to a software application that integrates both human resource management and payroll processing functions into a single system. When integrating a payroll system, it is important to ensure it is user-friendly, has an intuitive interface and is customisable to meet an organisation’s unique needs.
A new payroll system can help an organisation to streamline its human resource and payroll processes, improve accuracy and efficiency of data management while ensuring better employee self-service options. A self-service feature, for instance, empowers employees to access their pay stubs and benefits – which reduces administrative workload on the human resource unit. This innovation also tends to build trust among employees in terms of safety and confidentiality of their personal information. Some other considerations and allied benefits include:
Stakeholder Engagement
Any plan to migrate to a modern and automated payroll system involves committing resources. Hence, stakeholder engagement is important in the decision-making process. Key stakeholders should include those in the human resource, finance/accounts and IT (Information Technology) units. Their involvement is crucial and will help to identify specific requirements – bearing in mind the organisation’s size and number of employees, choice of software provider and the procurement process’s budget.
Streamlining Tax Computations
Tax computations can sometimes be daunting – especially when your organisation has business dealings with multinationals or expatriate employees in which tax obligations are different. But an automated payroll system can simplify those complex tax calculations to reflect changes in tax rates. This will then help to provide correct updates and enable an organisation to meet its tax filing deadlines with the revenue authority. An automated payroll system should also be able to generate a report that provides insight into how different components of an employee’s salaries and deductions are calculated on the basis of prevailing tax legislation.
Data Analytics and Reporting
Effective salary and compensation management relies on accurate and accessible data to guide decision-making. Timely reports based on accurate data also ensure transparency and accountability. It is in this respect that a technology-driven payroll system must have a built-in reporting functionality that can generate real-time reports with key metrics and trends.
Indeed, automated payroll systems provide detailed reports and analytics – thereby allowing organisations to track payroll data and make informed decisions. Apart from that, automation and artificial intelligence (AI) integration can also improve onboarding processes by identifying recruitment needs, reducing bias in the process and providing C-Suite reporting for an outstanding user experience.
Robust Data Security
A payroll management system requires security to protect sensitive data, such as salary and compensation details as well as staff social security numbers among others. When choosing an automated payroll system, it is important to look out for strong security capabilities to protect sensitive employee data and financial information from unauthorised access.
Those embedded security features should include strong access control, a data encryption method or passwords and robust databases with an interface that can pass the necessary data to other authorised systems. The system must have a dashboard that can easily help to track changes in data inputs and the personnel who can view, modify or approve reports. The control system will not only ensure the system’s integrity but also prevent fraud.
Records Management
Records management is synonymous with proper documentation and protecting vital documents. Indeed, an automated payroll software must not only have capabilities for protecting sensitive data but also have the components to eliminate human data-entry errors and reduce risks of information theft from the records.
It should be able to organise and maintain records regarding employee data, performance reviews, hours of work (time and attendance tracking), payment rates, and payroll dates & leave schedules. These features must enable an organisation to track employee data more effectively, thereby making it easier to manage workforce-related tasks and make data-driven decisions. We should also not lose sight of the fact that effective records management provides satisfactory evidence to facilitate hassle-free auditing, and the provision of timely assurance services to stakeholders.
Managed Payroll Services
Payroll processing can take much of some organisations’ productive time. Managed payroll services can also be an option that enables them to focus attention on core business operations. In considering this alternative solution, cost-effectiveness of the automated platform with those other advanced features and requirements is necessary.
Compliance Consideration
Complying with regulations in respect of employee compensation holds utmost importance when considering payroll systems. It is therefore imperative to procure a cutting-edge automated payroll system with features that can help your business stay compliant with legal requirements. Given the frequent changes in taxes, wage rates and laws, real-time updating and scalability should be a crucial feature of modern payroll software.
Conclusion
In closing, it is worth reiterating that the role of automation in transforming employee payroll systems cannot be underestimated. Its applications in streamlining data entry and workflows, tax computations, enhancing data security measures to ensure confidentiality of sensitive information have equally uplifted the modern human resource function to the status of a business partner that helps in making data-driven decisions for business growth. In effect, embracing the automation of employee payroll systems is no longer just an option but a necessity for businesses looking to stay competitive in today’s evolving digital world.
BERNARD BEMPONG
Bernard is a Chartered Accountant with over 14 years of professional and industry experience in the Financial Services Sector and Management Consultancy. He is a Managing Partner of J.S. Morlu (Ghana), an international consulting firm providing Accounting, Tax, Auditing, IT Solutions and Business Advisory Services to both private businesses and government.
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The global industrial automation market size reached some US$175billion in 2020. The market is expected to grow at a compound annual growth rate (CAGR) of around nine percent until 2025. In 2025, the global industrial automation market size should reach roughly US$265billion.
