Automated payroll: Functionality and organizational benefits

When companies aim for a flawless payroll process, everyone benefits. The organization prevents costly compliance mistakes, and employees get paid correctly and on time. But managing payroll manually can lead to costly errors and delays.

Automated payroll helps companies achieve their most accurate and efficient payroll processes yet. Discover the benefits and find out how to take your payroll to the next level with automation.

What is payroll automation?

Payroll automation uses software to perform routine payment and compliance tasks, reducing human interventions and speeding up processing. 

Automation software quickly performs tasks like:

• Time tracking
• Wage calculation
• Benefits application
• Tax withholding
• Direct deposit

These tools also keep detailed payroll and fiscal reports. Some also offer employee self-service portals, where team members can view payment information on demand.

How does payroll automation work?

Payroll automation software collects and stores essential employee data—from banking and tax information to time and attendance logs. The payroll system then uses these details to determine wages and generate paychecks. 

Once calculations are complete, the system schedules deposits to employee bank accounts on the designated payday. It validates each payroll run to ensure error-free payroll processing and compliance with taxes. 

Automated payroll tools also retain post-payroll records, like pay stubs, reports, and benefits documentation. Some go further by generating end-of-year fiscal statements like W-2s or 1099s, reducing the need for manual administration.

Key payroll automation benefits

Payroll software improves the payment experience for employees, HR, and People teams. Organizations that use an automated payroll solution can expect the following benefits.

Error reduction

In manual payroll processes, teams pull data from several different sources, which carries the risk of human error. A simple mistake can result in an incomplete deposit or tax payment. 

Automated payroll systems reduce mistakes by correctly calculating deposit and withholding amounts. This ensures that employees receive accurate paychecks and benefits. 

Compliance and legal protections

Payroll processes must meet local, state, and federal requirements. And if your company works internationally, payroll must also comply with fiscal and labor laws abroad. The consequences for errors range from fines to lawsuits. 

Automated payroll tools issue compliant payments in your home country and abroad. Global payroll services like Oyster make sure your organization follows the law, no matter where you hire. Plus, these tools perform meticulous record-keeping, meaning you have a paper trail if a tax or benefits agency asks you to show your work.

The best payroll software is also self-updating. When governmental regulations change, these systems automatically adapt to new information—often in under 72 hours. So you can rest assured that your payroll runs on the most current laws.

Time and cost efficiency

Automated tools speed up payroll processing by up to 60–70%. This gives People teams more time to focus on tasks like engaging the workforce or improving company culture.

Automating payroll also saves money. Teams no longer have to spend hours on repetitive payment tasks. And automated systems save companies up to 70% of fees associated with compliance errors.

Scalability for global growth

Without automated tools helping organizations stay compliant, People teams have to become experts on payroll tax and labor laws. Companies that hire employees and contractors in other states or countries face a significant learning curve and assume even greater risks. 

But automated payroll tools handle compliance, so your team doesn’t have to become global payment experts. Oyster’s international payroll and employer of record solutions help businesses confidently scale. This helps your team focus on growth instead of navigating complex regulations.

Improved employee experience

Employees appreciate a smooth payroll process. When they receive payment on time and correctly, it improves their experience at your organization and increases trust by 37%. 

Self-service portals are another part of the automated workflow that helps to boost the employee experience. They allow your workforce to access digital payment records on their own, without the need to engage in time-consuming back-and-forths with administrators to get payment information.

6 steps for implementing an automated payroll system

Adopting payroll automation requires more than just choosing the software. A successful rollout depends on following a structured approach. Here are six key steps to help with the transition.

1. Assess current needs

Start by considering where your payroll team needs help most. For larger organizations, that might be speeding up processes with time-saving tools. For companies that manage complex global payrolls, compliance guidance is a must. Consider your budget, as well. The good news is that many automated payroll providers offer pricing tiers that fit both large and small business needs. 

2. Select a payroll software

Explore tools that meet your company’s needs and budget. The software should seamlessly integrate with your current HR and payroll systems, saving you from having to completely overhaul your tech.

You’ll also want to pay attention to features that enhance the employee experience, like self-service portals. And if you want to automate several processes at once, tools like Oyster help with tasks, such as tax filing, direct deposit, and benefits application. Oyster can also manage international compliance for businesses with a global payroll process.

3. Migrate information 

Integrate your attendance tracker and human resource information system (HRIS) with the automation software. This step will migrate existing data into the new tool and allow it to pull information in the future. While this process should be relatively smooth, it’s smart to cross-check data between the new and existing systems for accuracy. 

4. Configure and customize

This is where you set up payroll preferences at the organization and individual level. Customize the payroll cadence to match company policies and pay schedules. You’ll also apply deductions, benefits, and direct deposit settings to employee profiles if this information didn’t automatically migrate into the payroll system during integration.

5. Train the team

Your staff and employees will need to understand the payroll system. Your HR and People teams will rely on it for daily work, and employees will access it to look up payment data. So provide training sessions on using the tool. Depending on the provider, your new software may come with onboarding training to help with the transition. 

6. Test, monitor, and improve

Payroll software boasts excellent accuracy levels, but it’s still smart to spot-check processes. Perform a payroll test before going live with the new system to help catch and fix any issues. When the system is up and running, invite employees to share their feedback on the software. They may have good insights on how to make payroll an even better experience.

How to choose the right payroll automation software

The best payroll software is one that fits your organization’s needs. Before investing in a new tool, evaluate providers based on these key factors: 

• Integration capabilities: New payroll software should be able to connect with your existing tools, like your HRIS. If it doesn’t, it could require hours of manual labor and limit your ability to take full advantage of the software’s features.
• Data security: Payroll services need to be able to protect sensitive employee data, from Social Security numbers to banking details. Look for encryption, backups, and role-based access. 
• Scalability: Make sure the software can support growth. The tool should be able to run payroll for a large number of employees. And if you’re thinking of going global, work with an internationally-compliant system like Oyster. 
• Reporting and analytics: Software with strong reporting tools makes it easier to evaluate costs and spot inefficiencies. And analytics provide insights into payroll processing trends and benefits administration. 
• User experience: Choose software with positive reviews from employees to ensure it delivers paychecks on time and offers an efficient self-service portal.

Simplify global payroll with Oyster

Save resources and headaches by working with a reliable automated payroll tool. Grow with a platform that allows your workforce to scale up. 

Oyster is an ideal option for global organizations seeking compliance and payroll support. It helps you confidently hire and pay employees and independent contractors—no matter where they live.

Explore Oyster’s global payroll solution today and see how automated payroll can turn compliance headaches into seamless payroll runs.