Streamlining Payroll Management: Innovative Approaches and Technology Integration

June 13, 2024

If you think payroll is merely about issuing payslips, you’re missing the bigger picture. In reality, it’s the critical lifeline of your entire organization. It’s how you ensure your greatest assets – your staff – are paid accurately and on time every period. And yet for many, it remains a burdensome, time-consuming and error-prone process – particularly if you’re using outdated manual systems.

Deloitte's Global Payroll Survey points out key challenges for payroll:

  1. Compliance.
  2. Accuracy.
  3. Self-Service Capabilities.
  4. Reporting Capabilities.
  5. Next-gen technology adoption.

Today we'll talk about all of them, but the last one will be the solution to the other ones.

Errors and time – the bane of payroll

How often errors happen in payroll management?

The question is not "if" errors happen, but rather "when", "in what number", and "how costly will it be to fix it".

EY's report points out that companies have 80,15% payroll accuracy, and the table below shows error frequency.

Payroll error frequency and cost per 1,000 employees by category, most recenr fiscal year
Payroll error frequency and cost per 1,000 employees by category, most recenr fiscal year

According to the American Payroll Association, 49% of employees would begin to seek alternative employment if they suffered just two payroll discrepancies. In the year of the Great Resignation, that’s simply not acceptable for any employer. 

Thankfully, payroll technology is evolving faster than ever and is available to businesses of all sizes. From cloud-based applications to AI-driven automation, there are numerous ways to ensure payroll is accurate, efficient, strategic for compliance and employee happiness – all while liberating your team to add value in other areas of the business.

How time-consuming payroll is?

About one-third of small businesses surveyed spend more than six hours each month on payroll and tax responsibilities." This implies around 72 hours per year on payroll activities for those one-third of small businesses.

Fourteen percent of small business owners said they spend over 20 hours per month just on federal regulations.

For reference, automation can reduce payroll processing costs by 80%. 

Smart payroll processing: it’s all about the 3Es – efficiency, effectiveness, and error reduction

In the modern, fast-moving business environment, relying on outdated payroll methods is like competing in a Formula One race with a horse and buggy. To remain competitive, businesses are adopting a threefold approach to streamline payroll processing, enhance accuracy and empower employees.

Cloud-based payroll software: your on-demand payroll department

What if we told you can have an entire payroll department at your fingertips – accessible from anywhere in the world, 24 hours a day, 7 days a week? That’s pretty much the promise of cloud-based payroll software. 

The advantages are clear and numerous. Automatic updates ensure you’ll never be caught out by unexpected changes in tax laws and regulations. Scalability means your payroll system can grow with your business without expensive upgrades. And real-time payroll data and analytics provide valuable insights into labor costs, overtime trends and more. 

Outsourcing payroll: let the experts do it

2022 Statista survey shows that 12% of companies fully outsource payroll and 26% co-outsource it.

For many businesses, particularly smaller companies, processing payroll in-house simply isn’t feasible. The complexity of tax laws, ever-changing regulations and need for specialized expertise can quickly become a nightmare. This is where payroll outsourcing comes in.

Automated data entry: eliminate the drudge

By integrating your payroll system with time and attendance software, employee self-service portals and even benefits enrollment platforms, you can significantly reduce manual data entry, and achieve streamlined payroll process.

Optical Character Recognition (OCR) technology can even convert data from scanned documents, such as invoices and receipts, further reducing manual input. The outcome is a quicker, more accurate payroll process with fewer headaches for your HR department. 

Payroll software solutions: Rule-based decision engines

While automation can streamline payroll processes, it’s rule-based decision engines that really boost accuracy and ensure compliance.

Think of these engines as the brains behind your payroll software. They’re programmed with a vast array of rules that govern everything from tax calculations and overtime eligibility to deductions and accruals for benefits.

These rules are constantly updated to reflect changes in federal, state and local laws ensuring your payroll calculations are accurate and compliant. This is important because even a minor mistake can trigger costly penalties and audits. In 2022, the IRS reported 33% of businesses were penalized for payroll errors, with an average penalty of over $845.

Rule-based decision engines can protect your business from financial risks, and also boost employee happiness. By ensuring you’re paying employees the right amount, at the right time, you’ll increase trust, employee satisfaction, and loyalty.

Benefits of using rules engines in payroll systems

  • Streamline Your Payroll Process: Rule engines automate repetitive tasks like calculating overtime, applying tax rates, and deducting employee benefits, drastically reducing manual effort and streamlining your entire payroll process.
  • Error Reduction and Improved Accuracy: By automating calculations and applying complex rules consistently, rule engines minimize the chance of errors, leading to more accurate paychecks, compliance, and satisfied employees.
  • Automatic Tax Calculations and Compliance: Rule engines stay up-to-date with ever-changing tax laws, ensuring accurate tax deductions and compliance at the federal, state, and local levels. This minimizes the risk of penalties and audits, promoting effective payroll management.
  • Time Savings and Increased Efficiency: Automation frees your payroll staff from tedious manual tasks, allowing them to focus on more strategic activities, leading to a more efficient payroll process.

Flexibility and Scalability: Rule engines adapt to evolving regulations and company policies. As your business grows, you can easily modify or add rules to accommodate new payroll requirements, ensuring your system remains effective.

  • Employee Benefits Management: Rule engines streamline the administration of employee benefits, automating deductions and accruals based on eligibility and company policies. This promotes transparency and reduces administrative overhead.
  • Reduced Payroll Costs: By minimizing errors, improving efficiency, and ensuring compliance, rule engines contribute to significant cost savings in the long run, helping you achieve your goal to reduce payroll costs.

Payroll trends and innovations: the future is here and it’s brilliant

The pace of payroll technology is accelerating, introducing trends and innovations that promise to make payroll management more efficient, accurate, and employee-focused.

AI and Machine Learning (ML)

AI and ML are transforming payroll by analyzing large datasets to identify patterns and potential issues. These technologies can flag suspicious overtime claims and predict staffing needs. Chatbots and virtual assistants are already streamlining onboarding and providing personalized payroll information, with future applications likely to include predictive analytics for budgeting and personalized financial wellness tools.

Employee Self-Service Portals

These portals empower employees by allowing them to access pay stubs, update personal information, enroll in benefits, and request time off through a user-friendly interface. Future advancements may include personalized financial dashboards, retirement planning tools, and educational resources, enhancing employees' control over their financial well-being.


The evolution of payroll management is a testament to the power of technology to streamline even the most complex business processes. From ledger books to AI-powered solutions, payroll has come a long way. By embracing innovation, businesses can unlock unparalleled efficiency, accuracy, and compliance.

Software like Higson's rule-based decision engine exemplifies this progress, ensuring payroll calculations are always precise and up-to-date with the latest regulations. With Higson and similar tools at your disposal, you can transform payroll from a burden into a strategic advantage, freeing your team to focus on what truly matters: growing your business.

Get a personalized evaluation of Higson's potential for your use case
More stories

The Role of Business Rules Engines in Regulatory Compliance

Explore how Business Rules Engines leverage AI to streamline regulatory compliance, automate decision-making, and adapt to changing regulations.


Business rules engines for competitive advantage in insurance

Gain a competitive edge in the insurance industry with business rules engines. Optimize risk assessment, claims processing, and product innovation


Customizing Business Rules Engines for Your Industry

Unlock industry-specific potential with customized Business Rules Engines. Boost efficiency, ensure compliance, and make smarter decisions faster.