AI Streamlines Payroll Processing, Compliance

Artificial intelligence streamlines payroll processing and improves compliance, according to an industry expert speaking on March 12.

The incorporation of AI to payroll functions can enhance payroll by eliminating errors and repetitive tasks, leading to faster and more accurate processing. In doing so, AI can help employees focus on more value-added work, according to Pete L. Tiliakos, principal analyst and managing partner at 3Sixty Insights.

Employers can benefit from current technology, like audits at the source, which helps payroll “find anomalies and validate data,” Tiliakos said, during his presentation at PayrollOrg’s 2024 Capital Summit held in Arlington, Virginia.

Speaking on the future of payroll automation, Tiliakos highlighted the benefits of incorporating software that continuously calculates payroll. “We’re headed toward fully autonomous payroll processing and the extinction of the payroll cycle,” he said. “Payroll is running all the time now.”

Clear and quick access to company financial data is crucial to ensure proper compliance and strategic risk mitigation, areas where AI “will be most useful” he said.

Many companies are already incorporating payroll automation through “employee experience and data sharing.” The emergence of FinTech and mobile banking is also shaping the expectations of the next generation’s workforce. “Employees expect to shape a personalized experience at work,” Tiliakos said.

Earned wage access, a form of on-demand pay, is a popular tool to incorporate technology and transparency into the payroll process. AI can help empower employees with greater access to their financial data, personalization that is only available through automation and artificial intelligence, he said.

Employers that fail to incorporate AI are simply “missing out on the opportunity,” Tiliakos said.

In many instances, small businesses rely on a single employee to process all business payroll. “You don’t want to have the entire payroll department on the back of [a single employee],” said Tiliakos, emphasizing the risks associated with such isolated payroll processing. Upgrades can include the implementation of Human Resource Management software solutions to make data more accessible to various departments.

Software can incorporate reminders, nudging employees to submit information in a timely manner. AI can validate data and give employees access to their finances at the click of a button. Streamlining payroll will benefit employees but will also empower payroll employees to use their knowledge and expertise in delivering added value.

Employers must ask, “How do I drive better business outcomes with this solution?” he said.

Many payroll professionals are hesitant to embrace automation, fearing developing AI could lead to inevitable displacement. But Tiliakos wants professionals to embrace the advancements, using their skills, along with the additional time, to create more value-added work. “Don’t see these solutions as a threat to employees. It’s a lever to pull when you need to solve problems,” he said.

“Activate the data that your company has and lean into the rich skills you have,” Tiliakos said. “Pivot your skills to become a strategic advisor.”

“And if you think AI is going to do it all? That’s nonsense,” he said.