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How to make your payroll and HR processes faster, accurate and more cost-effective

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(Image credit: Image Credit: MK photograp55 / Shutterstock)

In today’s difficult economic climate, it comes as no surprise that operational efficiency and cost-cutting are now right at the top of the agenda for many businesses. 

As a result, payroll and HR departments often come under scrutiny, as business leaders attempt to understand where it might be possible to reduce overheads or prune back on both direct and indirect expenditure. 

However, the modern workforce is becoming increasingly complex and dispersed, in particular due to the lockdown-enforced shift to remote working – and the situation won’t get any easier following the anticipated post-lockdown move to hybrid working.

Therefore, to balance these competing requirements effectively, a more sophisticated, technology-driven approach to managing payroll and HR processes is required. Failure to get it right will inevitably have a direct impact on crucial operational issues, such as the overall employee experience, compliance and risk management, all of which have an important role to play in shaping wider business outcomes.

The below five tips highlight how to set a business up for success by improving the speed, accuracy and cost-effectiveness of payroll and HR activities:

1. Where you can, automate 

The sheer complexity of many HR processes is all too often underestimated. Payroll processing, in particular, is frequently considered as simple as the press of a button, but this is far from the case.

On the one hand, ensuring payroll is processed in an accurate and timely fashion is a much harder and more involved activity than most people think. And on the other, even if it were possible, simply pressing a button to magically produce an end result is a distant dream for most professionals. 

In fact, according to our research, around 65 percent of organizations still complete either some or all of their payroll processing manually, with the figure rising to 68 percent for general HR tasks – even though many of them could actually be automated. 

In a payroll context, activities such as calculations and data input, could easily be digitized, while the same is true of HR duties ranging from records management and onboarding to time and attendance tracking. Once such processes have been automated though, there is the added advantage of being able to analyze, and report on, the data generated using appropriate software tools, thereby facilitating a process of continual improvement.

Put another way, automation can have a positive impact on controlling expenditure and boosting efficiency by cutting staff costs, reducing the frequency of expensive, time-consuming errors, and freeing up the team’s time to focus on value-add activities rather than just completing admin tasks.

2. Focus on compliance 

Digitizing your compliance processes is worth a special mention because of the central role they play in ensuring payroll and HR activities are efficient and reliable. Not only is it imperative to ensure employees are treated in accordance with the law, but compliance failures have the potential to become a huge drain on time, money and resources. 

For instance, those companies found to be in breach of paying the National Living Wage can face fines of up to 200 percent of the total amount owed to employees. In fact, during 2018/19, HMRC required non-compliant employers to pay out a huge £17 million in such fines as well as repay £24.4 million in arrears.

Automation can help in compliance terms by eradicating the manual errors that often lead to breaches in the first place. To this end, many software suppliers now include compliance features and monitoring tools within their systems in order to reduce risk.

This means that, although payroll and HR teams will still need to be given regular compliance training, it could also be of great benefit to consult regularly with your software and service providers about what it is they are doing to help you stay on top of the issue.

 3. Take payroll and HR to the cloud 

While around 52 percent of organizations currently benefit from using cloud-based HR systems, the figure is just under a third in the case of payroll, although adoption is expected to continue rising significantly, not least due to the impact of the pandemic.

Another reason is that, although on-premise applications may offer more control, they also require a lot more time, effort and money to maintain. Cloud-based software boosts the efficiency and cost-effectiveness of payroll and HR processes by:

  • Enabling authorized users to securely access payroll and HR data from any online device, thus making remote working easier; 
  • Moving the cost of, and responsibility for, operating and maintaining systems, which includes guaranteeing high performance levels, to a third-party provider; 
  • Making the process of upgrading and updating software quick and easy; 
  • Leveraging the world class data protection experts held by cloud providers to improve the security of your critical data;  
  • Ensuring flexibility if you want to change how your systems are used, or increase or decrease the number of users they support.

4. Integrate payroll processes with other business functions  

Our research shows that one of the top five technology pain points for just over half of all payroll and HR professionals is a lack of integration between their key systems. This is because many organizations fail to either integrate their payroll and HR systems together or to connect them with other applications from adjacent functions, such as finance or accounting.  

System integration plays a key role in managing costs and boosting operational efficiency. Data can be transferred seamlessly from one system to another, team members therefore no longer have to manually rekey in information relating, for example, to new starters or staff absences, which removes duplication of effort.

Integrated systems also enhance general productivity as they enable payroll and HR professionals to navigate quickly between applications - particularly if single sign-on functionality is included. This means they don’t have to enter multiple identity credentials and, even better, they can benefit from automated, end-to-end workflows.

5. Outsource to a trusted third-party 

Under today’s difficult circumstances, even the most efficient of payroll and HR functions may feel overstretched and in need of extra support to meet deadlines, stay compliant and get help with complex and resource-intensive processes, such as calculating furlough payments. 

But either fully or partially outsourcing payroll and HR delivery can offer a number of cost and efficiency benefits, which include:

  • Cost savings based on economies of scale and access to a global labor market – since your supplier runs payroll for a number of customers, it helps cut management overheads, increase process efficiency and provides access to a high quality workforce; 
  • Reducing errors due to highly automated workloads, strict Service Level Agreements and optimized processes; 
  • Cut direct costs, such as salaries, and indirect costs, such as office rental, printing costs, software hosting and system maintenance; 
  • Harnessing your data and converting it into useful insights on how to cut costs and boost efficiency still further. 

By following these key steps, organizations will vastly improve their day-to-day operations, whilst saving money and setting their business and employees up for future success, not just in the immediate months post-pandemic, but for years to come. 

Abigail Vaughan, Chief Operating Officer, Zellis


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Abigail Vaughan is the Chief Operating Officer of payroll and HR solutions company, Zellis. Zellis is trusted payroll and HR partner to a third of the FTSE 100.