What is realtime payroll and how does it improve payroll efficiency?

Realtime payroll means calculations are always up to date, throughout the month or week. It enhances flexibility and data accuracy, creating more resilient and compliant payroll processes. It’s also great news for employees, payroll teams, and organisations.

What is realtime payroll?

Realtime payroll replaces traditional batch processing with an ‘always in calc’ model that continually updates pay calculations as soon as new data comes in. Any changes to calculations, for example due to overtime working or sickness leave, are made throughout the pay cycle. This promotes greater accuracy as errors can be spotted and addressed early. It enables payroll teams to distribute their workloads more evenly across the pay cycle.

How does realtime payroll benefit employees?

With 69% of UK employees worried about money, financial wellbeing is a key consideration. Reducing the risk of payroll errors means more financial security and less stress for your people. When it comes to onboarding new hires, realtime payroll allows you to extend the payroll cutoff date, so that fewer late joiners have to wait until the end of the following month before receiving their first pay cheque. Again, this helps with elevated living costs and improves the employee experience.

What’s more, giving employees full, realtime insight into their current income, tax deductions, and salary sacrifice situation helps them to make more informed decisions. For example, they could weigh up whether to take an extra overtime shift to top up their income.

Traditionally, employees can only access their payslips at the end of a given pay period, usually either weekly or monthly. But with realtime payroll, people can see exactly how much they are earning, as they earn it.

For example, if they work overtime, the additional wages they are owed will be automatically calculated and appear in the system immediately. This means employees can query any potential problems before their official payday, allowing more time to find a solution.

How does realtime payroll benefit employers?

A key benefit for organisations switching to realtime payroll is that it improves payroll efficiency and accuracy, enhancing both effectiveness and compliance.

Distributing workloads more evenly across the payroll cycle allows more time for teams to verify data and drive accuracy, reducing the cost of errors and late leavers.

Even the most conscientious of employers have experienced mistakes due to imperfect knowledge or human error. But it only takes one such mistake when tracking workers’ hours, for instance, to fall short of National Minimum Wage (NMW) requirements.

The automated nature of realtime payroll, and the more even workflows it creates, cuts the risk of errors. This, in turn, reduces the likelihood of fines and reputational damage.

Beyond delivering pay itself, access to realtime data can also improve decision making. For example, it can help organisations undertake budget planning or work out necessary seasonal staffing levels.

How does realtime payroll benefit payroll teams?

Traditional payroll systems undertake batch processing at the end of each month. This means payroll teams often need to handle hundreds, or even thousands, of employee payments all at once. The situation puts them under immense pressure to ensure that everyone is paid accurately and on time all at once.

Realtime payroll systems help reduce stress by creating a steadier workflow. The live nature of the data involved means that payroll teams can keep an eye on what’s happening throughout the month.

As a result, if they spot errors or need to recalculate something, they can make changes immediately rather than having to tackle everything together at the end of the pay period. This also reduces compliance risks.

Realtime payroll likewise provides teams with more time to gather up-to-date, accurate data, analyse it and use it to adjust payroll entries where necessary. This frees up more time for them to handle value-added activities, including tackling employee pay queries more swiftly.

It also opens up time for them to undertake training, creating more opportunities for career development and better employee engagement.

The potential risks of payroll employee absence fall because activities are more evenly spread over the entire pay period, rather than being focused at the end.

COMMONLY CONFUSED TERMS

Is realtime payroll the same as earned wage access or flexible pay?

No. Earned wage access (EWA), also known as on-demand or flexible pay, offers employees a way to access their pay as soon as they have earned it, rather than waiting until the next payday. Because realtime payroll provides up-to-date pay calculations, it can help to make flexible pay easier to deliver. However, they are two separate things. Introducing flexible pay would be an organisational policy decision.

Read our article about flexible pay here.

Is realtime payroll the same as realtime payments?

No. Realtime payment (RTP) is a payment processing network enabling the immediate transfer of funds from one bank account to another anywhere around the world 24/7. The transaction occurs within seconds of it being initiated, making funds instantly available to the recipient.

Is realtime payroll the same as realtime information?

No. Real Time Information (RTI) is an HMRC initiative requiring UK employers to transmit data about tax and other deductions under the PAYE system electronically every time they pay an employee.

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Which is the best realtime payroll system?

Zellis HCM AIR, our new flagship solution, delivers realtime payroll now. The “always in calc” model keeps payroll updated, so teams can work throughout the whole payroll cycle with unprecedented accuracy, eliminating the frantic rush at the end of the month.

Our most efficient and accurate payroll platform to date also includes a range of AI-powered features, including intelligent anomaly detection, intelligent data input, and intelligent payslips.