AP » UK Payroll sector benefitting from technology-led progression

UK Payroll sector benefitting from technology-led progression

UK reporting lowest First-Time Approval (FTA) rates, but insight shows greater accuracy in payroll

The increasing role that technology plays within pay cycles is benefitting UK payroll teams and reducing errors, according to the latest Global Payroll Efficiency Index (PEI) from CloudPay.

The PEI report is based on an analysis of more than one million payslips that CloudPay processed in 2023, from over 130 countries.

Traditional and widely used payroll metrics, such as timeliness and accuracy, very often paint a falsely positive picture of a payroll operation’s performance.

CloudPay’s PEI report focuses instead on a series of KPIs specifically designed to give true insight into the time, cost and complexity required to deliver a payroll; these KPIs include First-Time Approvals (FTA), Data Input Issues (DII), Issues Per 1000 Payslips (I/1000), Calendar Length (CAL) and Supplementary Impact (SI).

The data showed that the UK has the lowest First-Time Approval (FTA) rate (52.42%), which, coupled with falls in DII, and I/1000, reflects an increased adoption of technology and innovation over the past few years.

This is seemingly giving teams better data and more time to pick up on errors immediately, reducing payroll issues.

“The latest PEI report shows a fall in global FTAs for the second year in a row, which may sound negative, but when combined with declines in both DII and I/1000 instead highlights a greater focus on accuracy in the payroll industry,” explains Grant Tasker, Senior Director of Global Payroll at CloudPay.

“The UK specifically recorded the third lowest I/1000 and the lowest FTA rate of any country which, combined with a fall in DII, reflects the steady improvement shown by payroll teams based here. I’ve no doubt that this is a direct result of the growth in technological innovation, both in the UK and around the world, that we continue to experience.”

Global statistics

Now in its fifth year, the latest iteration of the PEI shows a decline in global FTA of 0.55% from last year’s results, with the EMEA region noting the greatest fall (1.2%) for the second year in a row. Data Input Issues also continue to decline, down 1.1% year-on-year.

This means that the global DII rate is now 8.4% lower than the first edition of the PEI published in 2019. Issues Per 1000 Payslips have also fallen by 35% since 2019, with the latest data showing a yearly fall of 2.78%.

For the last two editions, the PEI has examined payment timeliness in addition to the five payroll metrics; in 2023, 99.28% of payments were made on time globally, a 0.26% improvement from last year.

According to CloudPay, these combined statistics suggest that fewer mistakes are being made in payroll processes, and of those that are, most are being picked up at the validation and checking stages.

“We have seen evidence that fewer mistakes are being made, and more of those that are still happening are being picked up at validation stages. Considering that ensuring accurate and timely pay processing was listed as the top priority of global pay teams in a recent Everest Group research report, this is certainly encouraging,” says Tasker.

“The findings from the PEI report demonstrate that unifying different functions through HCM integration, and adopting new technology, can support better payroll efficiency. This, combined with a focus on greater local and global cohesion with other functions, and delivering a more modern, unified pay experience, will be the focus of the global pay sector in the future.”

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