Second consecutive decline in global First-Time Approval rates (by 0.55%)
- EMEA region noted the greatest fall in FTA rates for the second year in a row
- Fall in Data Input Issues, and Issues Per 1000 Payslips, suggests greater accuracy in processing
The increasing role that technology plays within global pay cycles is benefitting payroll teams and reducing errors, according to the latest Global Payroll Efficiency Index (PEI) from specialist global payroll provider, CloudPay.
The PEI report is based on analysis of more than one million payslips that CloudPay processed in 2023, from over 130 countries. Traditional and widely used payroll metrics, such as timeliness and accuracy, very often paint a falsely positive picture of a payroll operation’s performance. CloudPay’s PEI report focuses instead on a series of KPIs specifically designed to give true insight into the time, cost and complexity required to deliver a payroll; these KPIs include First-Time Approvals (FTA), Data Input Issues (DII), Issues Per 1000 Payslips (I/1000), Calendar Length (CAL) and Supplementary Impact (SI).
Now in its fifth year, the latest iteration of the PEI shows a decline in global FTA of 0.55% from last year’s results, with the EMEA region noting the greatest fall (1.2%) for the second year in a row. Data Input Issues also continue to decline, down 1.1 % year-on-year. This means that the global DII rate is now 8.4% lower than the first edition of the PEI published in 2019. Issues Per 1000 Payslips have also fallen by 35% since 2019, with the latest data showing a yearly fall of 2.78%. For the last two editions, the PEI has examined payment timeliness in addition to the five payroll metrics; in 2023, 99.28% of payments were made on time globally, a 0.26% improvement from last year.
According to CloudPay, these combined statistics suggest that fewer mistakes are being made in payroll processes, and of those that are, most are being picked up at the validation and checking stages. The specialist payroll provider believes that this trend is largely due to the increasingly significant role that technology and innovation is playing within the payroll sector, along with more effective integration with HCM systems, which is increasing efficiency and productivity by freeing up expert time.
Grant Tasker, Senior Director of Global Payroll at CloudPay, commented:
“The latest PEI report shows a fall in FTAs for the second year in a row, which may sound negative, but when combined with declines in both DII and I/1000 instead highlights a greater focus on accuracy in the payroll industry. I’ve no doubt that this is a direct result of the growth in technological innovation that we continue to experience. We have seen evidence that fewer mistakes are being made, and more of those that are still happening are being picked up at validation stages. Considering that ensuring accurate and timely pay processing was listed as the top priority of global pay teams in a recent report, this is certainly encouraging.”
“The findings from the PEI report demonstrate that unifying different functions through HCM integration, and adopting new technology, can support better payroll efficiency. This, combined with a focus on greater local and global cohesion with other functions, and delivering a more modern, unified pay experience, will all boost the sector’s growth in the future.”
