According to The Workforce Institute, 49% of American workers will start searching for a new job after just two issues with their paycheck. And there’s a good reason for that: 72% of employees admit they would experience financial difficulties if their paychecks were delayed by 1 week.
Severe as delays and errors are, even experienced HR and accounting teams can have a hard time preventing them. That’s because of the inescapable challenges all payroll professionals know too well: changing regulations, country- or state-specific tax policies, and loads of employee data. On top of that, there are dozens of moving parts like overtime, raises, or holidays that vary for every single employee.
These difficulties lead to mistakes, and mistakes cost money. In 2020 alone, Internal Revenue Service fined US companies $6 billion for payroll errors. The fact that 34% of small businesses run payroll manually using spreadsheets raises the risk of penalty even further.
Luckily, there’s a solution: RPA payroll automation. Let’s investigate the technology, its benefits, payroll processes that can be automated, and examples of companies that thrive thanks to RPA in payroll.
What is RPA payroll automation?
Payroll automation refers to the technology used to streamline payroll processing and management workflows. Payroll automation software can help payroll teams better handle tasks like entering and updating employee info, filling forms, and sending payments.
RPA (Robotic Process Automation) is one of the most common automation technologies. It uses automated scripts (or bots) that operate on preset rules to perform defined tasks faster and more accurately than human workers. RPA excels at handling processes that are based on rules, repetitive, involve large datasets, and are prone to errors.
The payroll cycle consists of many tasks that fit this profile and could benefit greatly from RPA automation. For example, in Deloitte Global Payroll Benchmarking Survey, 30% of respondents named the manual entry of inputs as the most time-consuming task in the payroll process. But what exactly can companies get from payroll process RPA?

What are the benefits of RPA payroll automation?
Automation solutions such as RPA have already found their way into many industries. In the Global Deloitte RPA Survey, 53% of respondents said they have already started using or implementing RPA. This includes sectors where daily operations involve large volumes of sensitive data, such as healthcare or banking.
HR is no different. We’ve already described how to use RPA in recruitment to make better decisions in a shorter time. Running the payroll process is another essential function of HR teams, usually shared with finance and accounting departments. How can they all take advantage of the payroll process RPA?

Time and cost savings
Calculating, auditing, and submitting payslips is a time-consuming process that involves dozens of files and documents, usually stored in various formats and places. This creates a lot of room for time and cost inefficiencies.
Automated payroll solutions have a proven track record of decreasing these inefficiencies. It’s estimated that implementing automation can reduce the costs of payroll processes by up to 80%. This is achieved by improving access to necessary documentation, eliminating manual data input and duplicated tasks, handling complicated calculations, and tracking changes to employee information.
Reduced errors
A study by Ernst & Young found that 1 in 5 payrolls in the US includes errors. While 80% accuracy is enough in some areas, in payroll, it just won’t cut it. The same report reveals that each payroll mistake costs organizations $291 on average.
Even the best HR specialists make mistakes when dozens of factors, such as deductions, overtime, bonuses, or PTO, must be considered. With payroll process RPA, you will no longer need to worry about entering this data manually, which will reduce the number of mistakes. Self-service is another convenient feature of an automated payroll system that allows employees to update their details independently to prevent further errors.
Compliance
Another thing to consider is staying compliant with constantly changing regulations that vary between countries and states. This became even more problematic after the pandemic when companies became more open to hiring remote workers. As a result, 74% of organizations must use dedicated payroll systems for each locale rather than a centralized one.
Here, automation can help companies observe policies through automatic tax filing, data entry, and policy updates. Automation will also make migrating to a single, centralized, and global payroll system easier.