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.
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.
7. Global Resource Management
By deploying RPA in payroll globally the data processing can be centralized, standardized, and fully automated. This creates an opportunity to analyze the Big Data generated that comes from all global operations. Interdependencies between organizational functions are identified to highlight any inconsistencies and wastefulness in the organizational structure.
Legacy systems can be retired, and inefficiency reduced. There will no longer be any data silos of information that is not available to upper management. The lack of interoperability within the organization that diminishes the efficiency of the payroll functions can be eliminated.
Enterprise-wide payroll data collection allows an organization to conduct forensic evaluations of workforce demographics and improve the geographic deployment of the workforce.
8. Payroll Department Staff Reduction
Companies that implement an RPA payroll processing system will either be able to significantly reduce human payroll department staff or change the work efforts of those employees. Performing redundant, routine tasks is not the best use of human laborers. This effort can be redirected to more value-added activities for the organization.
Change management is advised to make the transition to a reduced HR effort for payroll processing. This helps make sure impacted workers do not sabotage efforts when introducing process improvements.
9. Payroll Processing Improvement is Overdue
Many companies are just now discovering the benefits of RPA applied to payroll processing. For decades, the payroll function has been the least likely to see automation improvements. Many companies use local payroll services to outsource the processing.
Now, C-Level executives are becoming aware of the benefits to their company from using RPA payroll processing. Ernst & Young published a case study about an international company that implemented RPA, which resulted in improved employee morale, efficiency, and engagement. The cost/benefit analysis of RPA implementation makes a very strong value proposition that, when understood completely, becomes almost irresistible.
RPA systems for payroll processing streamline data collection, accelerate access to data, and improve data accuracy with automatic validation. If you have not already made plans to implement an RPA system for payroll processing, now is the perfect time to take action to do so. The downside risk is nearly non-existent, and the benefits are well demonstrated.