Payroll integration: Benefits of integrating HR and payroll software

Employee data stored in an HRIS software. Working hours and attendance tracked in one tool, time off requests managed in another. And payroll processed via a separate system. This is the reality faced by many businesses and organizations. The same data and information is required for different tasks carried out by payroll and HR departments, yet every department works with their own tools and systems. 

The result: Low to zero data transparency. Double work for data maintenance, which could be done in a centralized way. Resources wasted on unnecessary work. And unhappy employees because processes are slow and complicated.

To increase process efficiency throughout the organization and free up valuable resources for more important tasks in both HR and payroll, businesses should consider integrating their HR and payroll software. In this blog post, we highlight the different benefits of integrated HR and payroll systems and also take a look at global payroll integration.

Payroll integration means connecting your payroll software with other software systems and/or tools you use to manage your workforce. In other words: Synchronizing payroll and other software to allow data exchanges between those systems so that you’re able to access all the necessary data. This can be the tool you use to track employee attendance and working hours, your accounting and finance software, or your central HR system where you store all employment-related documents and information about each of your employees.

An integrated HR and payroll solution has many advantages for businesses, including improved efficiency and compliance, and enhanced employee experience and reporting. Here are 7 benefits of integrated HR and payroll systems.

1. No more duplicate files, endless paper trails and various passwords

Maintaining two separate systems and transferring data manually from one system to the other also requires an increased documentation effort and usually involves duplicate files, i.e. one for each system. The resulting paper trails are yet another reason why integrating HR and payroll software is an effort worth taking. As is the reduced amount of logins and passwords to remember.

2. Enhanced employee experience

Providing employees with the best possible experience throughout the entire employment cycle is one of the top priorities for talent management and retention. Integrated HR and payroll solutions often come with employee self-service functions. This means that employees are able to access and update their personal information online without having to go through HR. 

If HR and payroll systems are integrated, your team can access all their employment-related information in one place, such as payslips, job and contract details, and benefits. An integrated solution is also a lot easier to use than having to navigate separate systems with different logins. Plus: In case employees want to update their personal information, they only need to do so in one instead of several systems, which saves time.

3. Automation of administrative tasks

By integrating their HR and payroll software, businesses can say good-bye to manual data handling and tedious administrating tasks. Instead of manually transferring data from the HR system to the payroll system (or vice versa) and wasting valuable time and resources on keeping the data in both systems up to date, it’s a lot easier to just integrate both systems and enable automated data flows. 

Let’s take the example of employee time and attendance sheets. Information on time and attendance is usually collected and stored in your HR system. Yet the data sets are needed for the monthly payroll run - or even in shorter intervals if your pay period is weekly, bi-weekly or semi-monthly. Just think about how much time it takes to extract the data from the HR system and import it into the payroll software for each payroll run.

No need to point out that your staff could be doing far more valuable tasks during this time. With an integrated HR payroll system, you can increase the efficiency of internal workflows and improve the use of your resources.

4. Less room for error

Accidentally jumping one line in Excel is enough for a whole set of data to be mismatched. Whenever data is entered manually, there is a great risk for errors to occur. Wrong data then enters reports and can lead to fatal business decisions. Organizations should therefore reduce the amount of manual data handling to an absolute minimum. 

One way to achieve this is to integrate the HR and payroll systems. If the two systems are connected, thus enabling automated data transfers and updates, the error frequency can be reduced, especially since new data only needs to be entered once instead of twice. The same goes for updating existing data. Also, less errors in payroll means higher employee satisfaction, which ultimately comes down to lower turnover rates.

5. More transparency and improved reporting

Connecting your HR and payroll systems means creating a Single Source of Truth for all your workforce-related data. Having all your data stored in one single place increases transparency and allows for faster, better reporting. Since it’s a lot easier for your team to extract data from one centralized source (rather than spending hours filtering through different systems), reports can be compiled and delivered a lot faster. 

With an integrated HR and payroll system powered by one central platform, a few clicks is usually all it takes to generate reliable reports. What’s more, the accuracy of the reporting will increase because data sets and structures are harmonized across systems and offer a holistic view of all information related to your workforce. This also makes it easier to draw cross-references between payroll and other HR data, which can be used to develop strategies for improvement.

6. Improved compliance

Having all your payroll and HR data in order ultimately also helps you improve compliance. Less errors in payroll reporting means a lower exposure to possible fines and transparent centralized data makes it easier to meet deadlines for payroll tax and other reports required by the authorities. Not to forget: HR and payroll are interlinked in many aspects.

Let’s take up our example from earlier. Tracking working hours and overtime is a requirement for payroll, as you need this information for calculating employee pay. But working hours and overtime are also regulated by law and HR must ensure that legal limits are respected. Integrating your HR and payroll systems allows you to ensure both payroll and HR compliance via one centralized system.

Compliance with data protection standards such as GDPR is yet another aspect to consider. Integrated HR and payroll solutions are often cloud-based and therefore offer the highest data security standards.

7. Saves time and money

Considering all of the benefits we’ve mentioned so far, it’s safe to say that integrating HR and payroll software allows a business to save time and money. First, fewer resources are needed in both HR and payroll if the systems are integrated and manual tasks automated. Second, automated processes are a lot faster than manual processes, which frees up capacities for more important tasks. Third, with a better compliance set-up come lower compliance-related costs.

International organizations have to process payroll in various jurisdictions. The benefits of integrating HR and payroll systems for global payroll become even more pronounced than is the case for single-country payroll. Consider the following example: If you have offices in 12 different countries, each with stand-alone HR and payroll systems, the financial benefit of integrating the respective systems increases twelvefold.

To take the compliance and processing burden off the shoulders of their internal team, businesses often outsource payroll to local or regional payroll providers. Unfortunately, this leads to an increasing level of complexity, as data streams, systems and processes are neither standardized nor consolidated.

This problem can be solved with a global payroll solution like Lano which allows you to integrate all your payroll systems - this includes your own as well as those of your payroll providers - in one centralized platform.  

With Lano’s global payroll and compliance platform, managing payroll for your globally distributed team becomes easier than ever. Streamline your processes, automate your data flows and receive consolidated payroll data for your global team on one single screen. With the Lano API, you can integrate our platform with your HRIS and ERP systems as well as with your favorite workforce management tools. Book a demo to find out more.