Automated Accounting for Payroll
Payroll is a very important function in any business. Making sure that employees get paid correctly and on time is crucial, whether you are a small startup with 10 employees or a large bank with tens of thousands of employees around the world. But Payroll also comes with a number of important challenges:
• Payroll is time-critical – every month is a race to meet deadlines and cut-off dates. Late inputs (e.g. new joiners, timesheet information) often require heroic efforts by the payroll team to still get the payroll completed on time.
• Payroll is constantly changing – changes in tax, social security and employment regulations enforced by governments as well as increasingly sophisticated compensation policies put in place by employers mean that Payroll constantly needs to adapt and transform.
• Payroll is inherently multi-functional and interdependent – Payroll sits at the intersection of HR and Finance and requires close collaboration and exchange of data between HR systems, Finance systems and Payroll systems.
Against this backdrop, we find that in many organizations the exchange of data between Payroll, HR and Finance systems is still highly manual. For example, when we talk with clients and prospects across industries, they frequently share with us that their teams spend many hours each month in order to manually map and reformat the data being generated by their Payroll system to align it with their General Ledger structure so the Payroll data can be fed into their Accounting system. This manual process is not only time consuming but also error-prone, plus the human intervention opens up the possibility for fraudulent activity. And because it takes significant time and effort to complete this manual activity, it also creates a delay between when Payroll has been calculated and when Finance will see the data in their Accounting system which squeezes the time Finance has to interpret the data. And of course, if you run Payroll across many countries, the manual effort multiplies as the Payroll data needs to be mapped and General Ledger journal entries need to be generated for each country, whether you have 5 employees or 5,000 employees.
The good news is that now the process of generating accurate General Ledger journal entries from your Payroll data does not need to be so manual any more. With the arrival of smart software solutions in the Payroll market, you can now let the software automatically do the mapping and transposing of the data from Payroll to General Ledger structures for you. With a flexible configuration engine, you define and map the relationship between Payroll data fields and General Ledger data fields once, and the software will automatically generate your General Ledger journal entries for you every time you run your Payroll. And it is easy to update the mapping in case you have a new pay element introduced in your Payroll that now needs to be mapped to your General Ledger. In fact, the software will automatically remind you to map the new field so you do not accidentally miss it. Now, with the push of a button, you can have your General Ledger journal entries be generated directly out of your Payroll system.
This kind of smart, software-enabled automation that maps and feeds Payroll data to the Accounting system delivers the following key benefits:
• Significant reduction in time and hassle each pay cycle to create your GL journal entries
• Central oversight how the journal entries are being generated across the entire company and therefore higher consistency and reliability across countries
• Real-time data feeds from Payroll to Accounting system – the moment Payroll has been calculated, you can have your General Ledger data available; in fact, the automation means you can even quickly run simulations to evaluate what-if scenarios
• Less human intervention and therefore reduction in human errors or the potential for fraud
Best of all, these flexible solutions can be implemented on top of your existing Payroll and Accounting systems, so you can protect your investments in your current solutions and you do not need to rip and replace what you have already put in place.
If you want to learn more about this kind of automated Accounting Connect solution and how it can help you simplify your global payroll operations, read more here or book a meeting here.