Global economic instability and the rising costs of living have led to firms making additional payments to employees throughout the month, with First Time Approval (FTA) rates for payroll teams dropping last year, but payroll teams are feeling the pressure to improve the process from payroll to payment.
That’s according to a new report issued today by global employee pay company, CloudPay.
The PEI report benchmarks payroll processing KPIs across 130+ countries, analysing FTA in conjunction with Data Input Issues, Payroll Calendar Length, Supplement Runs and Issues per 1,000 payslips. Now in its fourth year, the PEI report demonstrates a decline in global FTA of 0.87%, with the EMEA region noting the greatest fall (2%), largely due to the economic instability noted in the region.
According to CloudPay, this drop in First Time Approval rates is indicative of payroll teams making additional off-cycle payments as firms increasingly look at ways to support staff during the cost-of-living crisis. This is further evidenced by additional research from CloudPay which revealed that the use of on-demand pay services last year increased, with withdrawal amounts doubling as users continued to use these solutions as digital ATMs.
Despite the fall in FTA, the PEI study reveals that payroll performance has improved overall globally, largely driven by tech innovation and better integration with Human Capital Management Systems (HCMs). This connection is providing a joined-up approach throughout the entire pay process that is leading to greater efficiencies from payroll to payment.
A 3.6% reduction in payroll data input errors was noted worldwide, with the Americas region leading in improvements with a 10.2% reduction in issues noted last year. Issues per 1,000 payslips also fell to a global average of 8.64 – the lowest rate ever recorded by the PEI report.
These improvements are no doubt a direct result of software and technology developments in the payroll sector which is further evidenced by the fact that Treasury teams reported that payments had been made on time in 99.02% of cases.
John Pearce, SVP Payroll Operations at CloudPay said, “The overall positive picture that we’re seeing in payroll performance is reflective of an increased desire and, indeed, ability, to innovate the pay process due to better tech integrations and a more joined-up approach on a global and local basis.
“Delivering a modern pay experience that is underpinned by technology, simplified for the end-user and flexible, is a top priority for global payroll teams.
“While the latest PEI report does indicate a fall in FTA which is generally considered a catch-all KPI for payroll efficiency, this is more likely a result of businesses providing additional financial support for employees as rising costs of living impact household budgets.
“We expect that the adoption of new technology will only serve to improve pay efficiency further and, perhaps more importantly, bolster employee experiences on a global scale.”