Payroll automation
Payroll Automation refers to arranging payroll services for a company or community in a manner that significantly reduces, or nearly eliminates, the manual labour of the wages clerk(s).
Payroll automation is achieved by means of computer software. Often, the payroll automation software is integrated into the company’s ERP (Enterprise Resource Planning) system that provides an overall view of the company’s or community’s finances; in addition to payroll, it can manage customer relationships, production, personnel resources, invoicing and accounting.
Payroll activities
Payroll management consists of several stages and procedures that require expertise in financial administration, such as employment contract management, and for which the employer is legally responsible. Payroll management contains the following tasks:
- Calculating and paying wages, settlement of tax withholdings
- Delivery of wage calculations and certificates to the employees
- Compiling statistics for different authorities, and for the purposes of improving activities
- Drawing up employment contracts
- Providing regulatory reports to the tax agency and insurance company, for example
- Calculating annual holidays
The travel costs and travel invoices from the employees are usually processed together with the payroll calculations.
How to automate payroll?
Payroll functions can be automated using software that centralises all of the information required for payroll calculations into one place. If the payroll software is not purchased as part of a comprehensive business management system, it can usually be combined with the company’s existing systems for accounting, sales ledger, working hour management or recruiting.
Since an activity management system allows these modules to interact, information that has been saved in one part of the system can be utilised in all of the software modules. Hours registered in the working management system, for example, are automatically transferred to the wage calculation system. [1] Even when payroll management is outsourced to an accountant, for example, the employer must still manage certain documents, such as employment contracts. Even then, payroll automation will improve the performance of the employer’s legislator duties.
Benefits
Payroll automation saves time and money and reduces mistakes, as it collects all information into one place in electronic format. Information that is required to calculate and pay wages does not need to be saved in the system several times over or moved from place to place. [2] [3] This also improves the work satisfaction of the wages clerk, as routine work requiring great precision is reduced. [4] The American Payroll Association (APA) estimates that automation reduces costs related to payroll management by up to 80%, which is partially explained by the reduced mistakes in wage payments and invoicing. [5] Well planned, modern payroll software provides the following benefits:
- It takes into account the calculation rules according to the collective labour contract, and the employer-specific procedures and exceptions.
- It provides a breakdown of the allowances and other bases for wages in the report, with dedicated rows for each day, week and month.
- It automatically follows the accounting and calculation rules set forth in legislation in the calculation of annual holidays.
- It manages the drawing up, posting, archiving and reporting of travel invoices.
- When combined with work shift management software, it can also utilise data concerning working hours, overtime, allowances, holidays and absences.
Commissioning and maintenance
The payroll software can be installed on the hard drive of a computer, or can be a browser-based, online cloud service that requires no installation or user maintenance. The provider of the software will directly update the online application, such as when changes are made to the collective labour agreement or working hours that affect wage calculations. The software provider is usually also responsible for data security.
Cloud services are increasing in popularity, especially because of their ease of use and cost-effectiveness [6] [7] , and payroll is one of the growth areas [8] .
A cloud-based payroll application is used online with a web browser, and its user experience is similar to any website that requires the user to log in.
Sources and references
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"Automated Salary Payment and Billing". Retrieved 9.4.2013.
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Grace, Natalie, Demand Media. ""What are the Benefits of Automating a Payroll System?"". Retrieved 9.4.2013.
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"Automated Salary Payment and Billing". Retrieved 9.4.2013.
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""How Many Ways Can You Save Money With an Automated Time & Attendance System? (Part 2)"". 12.10.2010. Retrieved 9.4.2013.
{{cite web}}:|first=missing|last=(help); Check date values in:|accessdate=and|date=(help); Cite has empty unknown parameter:|1=(help) - ^
""How to Automate Payroll"". 28.12.2010. Retrieved 9.4.2013.
{{cite web}}: Check date values in:|accessdate=and|date=(help); Cite has empty unknown parameter:|1=(help) - ^
""Cisco Global Cloud Index Forecasts Cloud Traffic to Grow Sixfold by 2016"". 23.10.2012. Retrieved 9.4.2013.
{{cite web}}: Check date values in:|accessdate=and|date=(help); Cite has empty unknown parameter:|1=(help) - ^
""Exploring the Future of Cloud Computing: Riding the Next Wave of Technology-Driven Transformation"". Retrieved 9.4.2013.
{{cite web}}: Check date values in:|accessdate=(help); Cite has empty unknown parameter:|1=(help) - ^
""How to Automate Payroll"". 28.12.2010. Retrieved 9.4.2013.
{{cite web}}: Check date values in:|accessdate=and|date=(help); Cite has empty unknown parameter:|1=(help)
External links
Information on multi-country payroll: Webster Buchanan's International Payroll Center http://internationalpayrollcenter.com/
Payroll article at wiseGEEK: http://www.wisegeek.org/what-is-payroll-administration.htm
Payroll concepts explained by software company Intuit http://payroll.intuit.com/payroll_resources/payroll_101/
National labour and tax administration websites concerning payroll and employer requirements, such as: Australian Government The Fair Work Ombudsman http://www.fairwork.gov.au/resources/fact-sheets/employer-obligations/pages/employee-records-and-pay-slips-fact-sheet.aspx Canada Renevue Agency http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/hwpyrllwrks/ The IRS (the U.S. government agency responsible for tax collection and tax law enforcement) http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Outsourcing-Payroll-Duties United Kingdom Government gov.uk: https://www.gov.uk/browse/employing-people/payroll United States Department of Labour http://www.dol.gov/compliance/guide/