An automated approval flow in payroll is the process through which a company's payroll is verified, reviewed and approved for payment through payroll software. It involves several stages, each has specific roles and responsibilities assigned to different individuals within the organisation. These stages typically include the input of employee data and hours worked, the validation of the payroll calculations, payroll approval and the final authorisation for payment. Here's a closer look at what makes up an approval flow in payroll:
Input and validation by managers: At an early stage, managers or department heads are usually responsible for providing necessary employee data for input into the HMRC payroll software including hours worked, overtime and any other relevant information. These figures are important for the accurate calculation of employee wages. The process begins with them.
Payroll validation: Once the data is entered, payroll needs to be checked for validity and accuracy. In many cases, a general manager or a person with expertise in payroll is responsible for this task. They check the calculations and ensure there are no errors or inconsistencies. It’s here that detailed payroll reports are run to highlight exceptions and analysed, so the approver can verify payrolls against previous months. Exceptions may be flagged which then lets the approver check and verify accuracy before signing off their level.
Final authorisation by Financial Director: The final signature on the payroll usually depends on the Financial Director or the high-level executive responsible for the company’s financial affairs. They review the entire payroll, verify its accuracy and give the green light for payment by approving payroll.
It’s important to emphasise the importance of well-managed approval flows for payroll. This system ensures that many people are identified and authorised to perform these tasks. This relativity is necessary to prevent a single point of failure. For example, if the people responsible for inputting data are unavailable due to illness or other reasons, there should be a backup in place to ensure payroll processing continues without disruption.
Why is it important to set up an automated approval flow?
Setting up an automated approval flow for payroll offers several benefits. Firstly, it provides an extra layer of security, as multiple pairs of eyes review the payroll data. This significantly reduces the chances of errors or shortcomings going unnoticed. Additionally, an automated system and an AI powered payroll system allows for the creation of reports at all levels of approval, enabling organisations to analyse and cross-reference data with previous pay runs.
Pros and cons of a manual approval process:
In contrast, a manual approval process can be time-consuming and prone to errors. Relying solely on individuals to validate and authorise payroll can lead to delays and missed errors. This method lacks the efficiency and consistency offered by automation and the risk of human error is higher.
Benefits of an automated process:
Automated approval flows save time, reduce the chances of errors and minimise the need for manual intervention. This streamlining the payroll process can ensure cost savings and better accuracy so that employees can be paid correctly, on time, every time.
Is an automated approval flow standard functionality in payroll systems?
While automated approval flows are common in larger payroll systems, they might not be a standard feature in very small, in-house payroll operations. Larger payroll software solutions and outsourced payroll often provide the functionality to set up and customise approval flows to suit an organisation's specific needs. This flexibility makes it possible for businesses to establish the structured, multi-level approval processes necessary for efficient payroll management.
An automatic approval flow in payroll is an important component of a well-managed payroll system. It offers an increase in security, efficiency and accuracy while reducing the risk of errors. By shaping processes with defined roles and responsibilities, businesses can ensure that their payroll operations run smoothly and reliably even in the face of any challenges.
Interested in automating your payroll for a faster, efficient, more accurate process? Contact us to arrange a demo, we'd love to hear from you!
