Easier money: the right technology can help make payroll processing faster, cheaper and more convenient for you and your employees
July 7th, 2007 by moniesOn average, employers spend $16 to process a single payroll check, according to a 2003 study by PricewaterhouseCoopers (PwC). Moreover, the study found, it matters little whether an organization uses one of the major enterprise resource planning (ERP) systems ($17.72 per check) or a smaller vendor or homegrown software ($14.45 per check).
(Larger organizations can achieve some economies of scale, however, Companies with 1,000 to 4,999 employees had an average cost of $20 per check, while those with more than 5,000 employees paid 35 percent less, or $13 per check, according to the PwC study.)
Why is the average cost so high? PwC discovered that 71 percent of the cost went toward labor, while software, maintenance and materials accounted for less than one-third of the total.
Fortunately for employers, using the appropriate technology can help slash both the labor and materials costs of processing payroll, while giving employees greater access to their own payroll and benefits information.
Slashing Labor Costs
For employers looking to reduce the labor involved in payroll, the keys are system integration and self-service.
By linking payroll systems directly into time and attendance software, companies can eliminate manual entry of data by supervisors and payroll or HR personnel, along with its attendant errors and the need for double and triple checking. Linking systems not only cuts time spent entering and verifying data but also eliminates the costly process of manually cutting checks to correct errors.
And employee self-service moves the entry of personal data over to those most interested–the employees themselves–and enables them to look up, enter and modify payroll information without the assistance of HR or payroll staff.
Achieving these time- and money-saving steps requires an exact interplay between several types of applications. In selecting payroll software, therefore, you are not just looking at payroll. You are looking at part of an entire system.
“Fundamentally, you have a number of key application modules that are becoming very integratable and intertwine with payroll processing,” says Albert Pang, research director, enterprise applications, for International Data Corp. (IDC), a San Mateo, Calif., research subsidiary of International Data Group Inc., the Boston-based technology publishing company.
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“You want to avoid looking at payroll in isolation and eliminate manual processes,” says James Holincheck, a research vice president in Chicago for Gartner Inc., an IT research and consulting firm based in Stamford, Conn. “A lot of the things that drive payroll would typically get maintained in another system.”
In fact, he says, it is hard to buy a stand-alone payroll system. “There isn’t a market for stand-alone payroll software, unless one is outsourcing the gross-to-net processing,” he continues. “Companies are looking for a broader set of solutions.”
For example, Titan America, a cement and building materials producer headquartered in Norfolk, Va., with 1,900 employees at 80 locations in nine states, runs Infinium payroll software (now part of SSA Global Technologies Inc. of Chicago) on an IBM AS400 server. It has a feed to and from the company’s timekeeping software–supplied by Kronos Inc. in Chelmsford, Mass.–and the company’s accounting system, and it has an interface to the employee appraisal system.
“We wanted an integrated human resources, benefit and payroll system; plus, we needed a centralized database and the ability to allow field HR and payroll personnel to access their area’s employee system,” says Yvonne Smith, PHR, director of employee services. “It was also important for us to have an electronic feed from the payroll system into our accounting system.”
Having such an integrated system cuts down on the time spent adding new hires to payroll, accommodating employees’ changes in their benefits, transferring funds, and performing financial reporting or audits. Information entered into one system becomes available in all the others. Thus, a new hire added to the HR system is automatically added to the payroll system and becomes a financial outlay in the accounting system–without additional manual entry.
Integration in Action
Author: Drew Robb
Posted in Uncategorized |