AI and automation set to make a mark on payroll
But experts need to differentiate between the two
But experts need to differentiate between the two
Global payroll efficiency has seen a marked improvement due to increased technology adoption, according to the latest Global Payroll Efficiency Index (PEI) report published by CloudPay. The report reveals a 35% reduction in payroll issues since 2019, highlighting the transformative impact of technological innovations in the payroll sector.
The PEI report, which analyses data from over one million payslips processed between January and December 2023, shows that payment timeliness has improved to 99.28%, a 0.26% increase from the previous year. This improvement, while seemingly small, represents a significant step towards near-perfect payment execution in a field where accuracy is paramount.
“As we’ve seen throughout the report, the increasing adoption of technology, including solutions connecting payroll and payments functions, has improved accuracy and increased efficiencies for global payroll teams,” the report states, underscoring the pivotal role of integrated technology solutions.
The impact of technology varies across regions.
In Europe, the Middle East, and Africa (EMEA), there has been a notable 5.6% decline in data input issues, making it the highest-performing region in this metric. The Americas (AMER) maintained the highest first-time approval rate at 82.06%, despite facing other challenges. Meanwhile, the Asia-Pacific region (APAC) presented mixed results, with a shortened payroll calendar length but an increase in data input issues.
John Pearce, Chief Customer Officer at CloudPay, emphasizes the potential of AI and automation in transforming payroll processes. However, he cautions against confusing the two, stating that many so-called AI-driven solutions are often automated tools rather than true artificial intelligence.
The report also highlights the growing interest in AI and automation among payroll professionals. A recent survey by CloudPay found that 43% of respondents were most excited about AI and automation payroll technology, ahead of other innovations like real-time payroll processing and cloud-based pay systems.
Despite the clear benefits of technology, the report stresses the continued importance of human expertise in payroll processes. As payroll complexity increases due to factors like remote work and varying international regulations, the role of skilled professionals in interpreting and applying these rules remains crucial.
The PEI report highlights that achieving and maintaining payroll compliance has become significantly more challenging in recent years. This is largely due to the rise of flexible and remote work arrangements, coupled with the variation of payroll regulations from one country to another. These factors have made meeting compliance regulations a more complicated and time-consuming endeavour for payroll teams.
“Payroll is built on accuracy and while the emerging technology is exciting, it’s far too early to hand it any significant responsibility. Each business will be different and will have to identify the ways that they can leverage their technology to its full extent,” says Pearce.
The report suggests that while technology can streamline processes and reduce errors, it cannot entirely replace the nuanced understanding and decision-making capabilities of experienced payroll professionals. These experts are essential for:
Furthermore, the report indicates that as technology frees up time for payroll teams, it allows these professionals to focus on more strategic, value-added tasks. This includes analyzing payroll data for business insights, improving processes, and ensuring that the organization’s payroll practices align with its overall business strategy.
Looking ahead, the PEI report suggests that further improvements in payroll efficiency will likely come from greater integration between payroll and payment processes. The trend towards unified pay solutions and on-demand pay options is expected to shape the future of payroll operations.