Five reasons you should consider integrating payroll with your HRMS

Payroll doesn’t work in isolation. Paying your team on time relies on data from accounting, time tracking, and benefits systems.

It also plays a key role in compliance, reporting, and HCM analytics. This is a major reason payroll is now commonly integrated with core HR technology.

With that in mind, let’s examine five key benefits of integrating payroll with an HRMS:

Single data entry

This one may be obvious, but it also has arguably the biggest impact. When all HR and payroll information resides in a single database (or tightly integrated databases), any update only needs to be entered once, greatly reducing the chance of downstream errors.

This comprehensive guide will help you set up and manage payroll with HRMS effectively

For example, with an outsourced payroll provider, a pay raise or tax code change might slip through the cracks, leading to paycheck errors and frustrated employees. The fewer separate systems and handoffs you rely on, the less chance for such discrepancies, which is why incorporating payroll within your HRMS can prove so beneficial.

Less paperwork

Assuming you still have some paper-based (or spreadsheet) processes, integrating your HR, accounting, and payroll information into the same database will save both time and trees.

Changes to an employee’s benefits, for example, are automatically reflected in your HRMS’s payroll module, eliminating the need to set up new deductions by hand.

In short, you no longer have to copy or re-enter data across multiple forms or systems.

Better quality reporting

As the importance of analytics continues to grow, managers expect sophisticated data-driven insights into the workforce to drive new efficiencies and boosts in productivity.

If your reporting tools can’t integrate payroll data, a significant dataset will be missing from your analyses, leading to an incomplete picture.  Integrating payroll with your HRMS unlocks more comprehensive analytics and accurate reporting.

You can easily track total labor costs or overtime trends alongside HR metrics (like headcount, turnover, or performance ratings) when all that data lives in one system. An integrated system can even automatically apply the latest tax and labor law changes and generate accurate reports, simplifying compliance audits and regulatory reporting.

Saving time with smoother teamwork

Even if payroll is handled within the HR department, it’s often managed by a dedicated sub-team. When HR and payroll staff all access the same system and share records, there’s far less back-and-forth or waiting for information.

Data flows seamlessly between teams, instead of being emailed in spreadsheets or re-entered in multiple places; companies find that after integrating their HRMS with payroll, they no longer have to chase down spreadsheets or scramble at the last minute – payroll simply runs on time with far fewer errors

Seamless accounting

Employee compensation might be your single biggest expense, but it’s still only one line item among many. Your finance team takes a big-picture view of organizational finances and relies on up-to-date data from all departments, including HR/payroll.

An integrated payroll system ensures that finance automatically receives accurate payroll data without manual imports. In fact, most integrated HRMS and payroll software offer APIs to sync payroll figures directly into popular accounting packages.

The right payroll software can integrate with common accounting systems (such as QuickBooks or Xero) to automatically post each pay run’s data.

Many midsize to enterprise-level businesses connect their HRMS’s payroll module with their ERP’s finance system, so wages, deductions, and benefit costs are reflected in the accounting ledger in real time, giving both HR and Finance instant visibility into labor expenses.

This not only saves time on duplicate data entry, but also ensures your financial reports and budgets always include the latest payroll costs with minimal effort.

Final thoughts

Achieving all these benefits requires some upfront planning. It’s important to involve your key stakeholders early, map your data fields carefully, and test the integration thoroughly to iron out any issues.

Ultimately, the payoff is worth it. In fact, 62% of payroll teams want better integration between payroll and HR platforms to eliminate data silos and improve consistency across systems. If your competitors haven't already made the move, they're likely planning to.