Major players in the business and commerce world today remain competitive by digitizing processes, services and operations.

In the same way, modern payroll integration simply refers to how any organization can leverage digital tools, such as software, to automate requisite data exchanges across all key systems that govern payroll administration.

What is payroll integration: goals of payroll integration

The overarching goals of payroll integration software is much the same as any form of digitization: to automate basic or tedious manual processes, streamline more complex processes and generate efficiencies that ultimately translate into a more productive organization. 

In other words, payroll integration is a process by which organizations can make the lives of their HR staff, accountants and leadership alike that much easier.

There are many types of payroll integrations, as are there many types of data that can be integrated; what processes see integration varies depending upon a given organization’s needs.

Traditionally, payroll integration would have occurred manually, a laborious and time-intensive process. Yet, the majority of organizations continue to manually integrate payroll data.

This increases costs both in the sense that more manual human intervention is required in the process and in that there are greater opportunities for user error, in turn resulting in data inaccuracies that cost organizations time and money. 

Modern payroll integration leverages Application Programming Interfaces or ‘API,’ where ‘application’ refers to any software or software stack designed for a specific, targeted and often critical function.

What data is targeted within a payroll integration process can vary upon need, from the fundamentals such as time, attendance and expense tracking to tax compliance, retirement account management, benefits management and everything in between that HR teams and accountants would benefit from. 

Payroll integration can also refer to what type of software an organization seeks to integrate, whether it be accounting, HR, tax filing or payment processing. 

This blog will dive into the benefits of payroll integrations before describing what the best integration method is and how organizations can go about making this essential change for their staff.

Benefits of payroll integration: saving time, making money

From high-level executives to HR staff, payroll integration stands to tremendously benefit organizations at all levels.

Why is fundamentally similar to any other automation or digitization process, particularly of tedious, mundane and time-consuming manual tasks: by automating these tasks, time is freed up for staff, management and leadership to focus on what really matters: running a successful business. 

That speaks to a key reminder for organizations today when they seek to automate or otherwise streamline HR operations through digital means: the aim should not be to altogether replace human input where it is most necessary but to free up the time and energy of employees to do the things only they can truly do best.

This can look like an HR manager who can now spend less time ensuring their team’s data entry is tip-top and instead focus on complex employee needs (especially when 45% of HR staff have to manually re-enter data every payroll), or a high-level executive who rests easy knowing that some of the most essential functions of their organization are guaranteed to comply with tax regulations no matter where in the world they do business.

In either case, payroll software integrations have a real, positive impact on an organization’s peace of mind.

Those tedious manual processes are often deeply detail-oriented, which tends to offer many opportunities for errors that can result in resubmission and sometimes even time spent retraining—both of which threaten organizational efficiency and the bottom line in a competitive 2024. 

By automating the tedium out of HR’s day-to-day, accuracy is improved and errors are reduced, saving time, improving organizational efficiency and even increasing security by reducing vulnerabilities that could result from (e.g.) improper benefits administration or poor tax code compliance, both fast ways for organizations to find themselves in court. 

Who benefits from payroll integration? 

In brief, payroll automation saves—or makes—organizations money. Again, this benefits everyone at an organization, from HR & payroll staff and management to finance leads, senior level management and everyone doing the critical day-to-day work that makes every organization run. 

This results in an improved employee experience at a time when the global labor shortage continues, placing renewed emphasis on supporting the employees an organization does have. 

It also benefits every size of organization, from the largest to small-and-medium sized businesses.

In fact, while the largest organizations practically require modern payroll integration to function smoothly today, small-to-medium-sized businesses (SMBs) are often those most inclined to want to try and get along without it. 

Yet, SMBs are arguably most in a position to benefit from automating payroll integration so they can instead engage in the busy, tireless work of making their (e.g.) new business the greatest success it can be by focusing on what matters, such as customer service efforts.

While that’s why payroll integration stands to benefit any organization that hires employees and complies with tax law (in other words, virtually all organizations), how is another question. Thankfully, due to new technologies and processes, it is easier today than it ever has been. 

How to implement payroll integration systems for better results

So far, what payroll systems are and why they benefit almost any given organization has been laid out, but how to go about this may be puzzling for (e.g.) HR managers looking for a change. 

As discussed, manual payroll integration is increasingly the way of the past: inefficient, costly, distracting, and error-prone at a time when cyberattacks on critical organizational infrastructure are only growing—and as any cybersecurity professional can tell, the more human input within a process, the greater opportunities for cybercriminals.

Rather, organizations today can integrate their payroll through APIs and cutting-edge solution providers that specialize in integration for businesses of any size.

However, not all solutions are created equal, and some older digital approaches to automated payroll integration such as Electronic Data Interchange (EDI) and Secure File Transfer Protocol (SFTP) are today inefficient and difficult to use.

Meanwhile, older implementations of API stacks that require individualized integrations are expensive and time-consuming, something organizations are specifically seeking to avoid by integrating their payroll.

It is with new, automated, universal APIs that research has found employers can save between 50 to 100 hours per year. How? By providing a one-size-fits-all approach that automatically accommodates a much wider range of organizations, needs, and functions.

This can be done in concert with a solutions integration, or an API integration-platform-as-a-service (iPaaS) to help organizations overcome any hurdles they might experience during the onboarding process (including training and integration with existing, legacy processes and solutions). 

With a modern API payroll integration solution in hand, organizations can target their needs with the assurance that every dime is tracked and every commitment made from employee benefits to tax-advantaged accounts, retirement and 401k planning, compliance, and reporting.

Furthermore, in contrast to (e.g.) STFP payroll integrations, universal APIs avoid thousands in setup costs, avoid per-payroll fees, can go live within 4-6 weeks, don’t require testing or significant human intervention, and can even process historical payrolls.

In sum, modern, digital payroll integrations allow organizations to take time-consuming, tedious, and error-prone (read: expensive) processes to be automated via software and API. This benefits everyone at an organization from top to bottom by simply making key operations smarter, faster, and more accurate.

Yet, there are better and worse ways to go about modernizing payroll integrations. Newer, more flexible APIs and integrations-as-a-service pave the way for any organization to ensure that their fundamentals are covered today and tomorrow.

To discover how Payroll Integrations' API platform can transform your benefits management process, visit: https://www.payrollintegrations.com/401k-capabilities-sheet