Payroll mistakes declining, but errors in data input account for majority of issues
The increasing role that technology plays within global pay cycles is benefiting payroll teams and reducing errors, but more work needs to be done, according to the latest Global Payroll Efficiency Index (PEI) from specialist global payroll provider CloudPay.
“Technology allows for the integration across HR, payroll, and payments to create one seamless, modern pay experience. Companies who capitalize on this opportunity will unlock even greater efficiencies across the business.” -Grant Tasker at CloudPay
Globally, issues per 1000 payslips have fallen for the second consecutive year and the rate is now 35% lower than five years ago. Data Input Issues, the proportion of issues caused by mistakes in data input out of all issues affecting payroll, also declined slightly, down 1.1% year-over-year and is now 10.1% lower than when the report was first published in 2019. While these numbers reveal a higher quality of data overall, almost two-thirds (63%) of all payroll issues are caused by data input mistakes.
In the United States, First-Time Approvals, the percentage of payroll runs that are approved at the first attempt and don’t require any changes, are at 69%, compared to 74% globally. This leaves much room for improvement for the U.S. in the areas of data accuracy and workflow.
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Grant Tasker, Senior Director of Global Payroll at CloudPay, commented:
“The declines in both DII and I/1000 highlights a greater focus on accuracy in the payroll industry. I’ve no doubt that this is a direct result of the growth in technological innovation that we continue to experience. At the same time, companies still have a long way to go. With almost two-thirds of payroll mistakes stemming from data input, it’s clear that more organizations need to automate their payroll processes. Leveraging the right technology will help companies obtain the accurate and timely pay processing they are looking for.”
The PEI report is based on 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. By contrast, CloudPay’s annual PEI report focuses on a series of key performance indicators (KPIs) specifically designed to give true insight into the time, cost, and complexity required to deliver payroll: First-Time Approvals (FTA), Data Input Issues (DII), Issues Per 1000 Payslips (I/1000), Calendar Length (CAL) and Supplementary Impact (SI).
The New Payroll Cycle
Payroll cycles are increasing. Calendar length in the Americas has risen by more than 60% in just three years, as many companies in the U.S. and other regions have shifted from weekly or bi-weekly pay toward monthly payroll cycles. Technology-powered solutions such as Earned Wage Access, granting workers access to their wages as they earn them, has allowed employers to run payroll less frequently, allowing payroll teams more time to complete the process.
The Impact of AI
While the PEI data is trending positive, the numbers have begun to plateau, indicating that it may be difficult to make additional significant improvement without further innovation. While AI has not yet been widely adopted in the payroll space, it has the potential to elevate payroll to a strategic part of the business.
Tasker added, “Technology allows for the integration across HR, payroll, and payments to create one seamless, modern pay experience. Companies who capitalize on this opportunity will unlock even greater efficiencies across the business.”
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