Integrated HCM Systems Increase Payroll Efficiency, Reduce Fraud

Disconnected data can make payroll processing unsustainable, a payroll expert said on May 8, speaking at the 42nd Payroll Congress in Nashville.

Integrating HR and pre-payroll processing can help create seamless and automated data sharing, avoiding data duplication and manual work, said Fidelma McGuirk, founder and CEO of Payslip. Pre-payroll is often referred to as the data collected prior to undertaking payroll processing. This commonly includes information on salary, tax deductions, medical or vacation leave, and other employee benefits.

Automating pre-payroll data is a great way to facilitate data sharing, providing benefits for both employees and employers, McGuirk said, yet “we don’t see many companies in the market [that] have all of their payroll input data in one system.”

Most employers rely on a variety of human capital management software solutions to collect employees’ payroll data. For example, she said a company might rely on one company for employee timekeeping, another company for processing employee pay, and other software solutions for each individual benefit the employer provides. This fragmentation of data can often lead to inaccuracies in payroll processing.

Investing in payroll technology to connect your payroll and HR HCMs can ease payroll administration, McGuirk said, preventing common downstream errors or inaccurate processing that can often lead to wasted capital and additional employee time. To avoid such errors, employers must ensure their payroll data is complete and accurate, she said, and the only way to do so is by having a clear picture of your data in a timely manner.

Interconnected HCM systems are also essential for many international corporations who deal with multijurisdictional withholdings. “There’s an exponential increase in the complexity and quantity of the data [international corporations] have,” said McGuirk.

While implementing integrated systems is generally not free, failing to do so can come at a much higher cost. “You’re already paying the cost by spending millions on stress and the extra hours spent making corrections,” said McGuirk, who highlighted the costs associated with fragmented HCM systems. “The lack of unified systems can reduce market entry and growth by up to 30% annually,” she said. “If you ignore the different systems, it will lead to payroll inaccuracies, and it will cost you.”

Employers seeking to integrate their HCMs can now do so easily by simply using the integration options offered by one of the many HCM providers they already use. “Many HCMs are making integration friction-free. Integrating systems shouldn’t be a big project like it was five years ago,” McGuirk emphasized.

“There’s no longer a need to find a one-size-fits-all solution,” she said.

In the end, payroll processing must be reliable, and the only way to provide true reliability is with complete and accurate data. “Incomplete data can create room for fraud,” said McGuirk, “and you won’t catch it if you can’t see it.”