Payroll software integrations allow you to sync your payroll system with other software used to help run your business. It saves you from having to enter the same payroll information into separate programs—and sometimes even allows your employees to do some of the work for you (such as with employee self-service programs).
Payroll software commonly integrates with HR, time and expense tracking, and bookkeeping software. These integrations, which usually take just a few minutes to set up, create seamless workflows and automate many of the processes it takes to pay employees on time. You can find integrations for a wide range of tasks, depending on which payroll software you use; some enable more integrations than others.
If you are still not sure which payroll provider is right for you, you can learn more in our how to choose a payroll software article. Be sure to consider services that offer a wide range of software integration capabilities to make the most of your payroll software integrations.
How Payroll Software Integrations Work
Payroll software integrations work by establishing a connection between a payroll system and other software applications, enabling the seamless exchange of data between them. Here’s how payroll software integrations work:
1. API Communication
Payroll software often provides an Application Programming Interface (API), which acts as a set of rules and protocols for communication. The API allows external systems to interact with the payroll software.
2. Initial Set-up
Organizations identify the need to integrate their payroll software with other tools, such as HR systems, time and attendance systems, or accounting software. This decision is based on the desire to streamline processes, reduce manual data entry, and ensure data consistency.
For example, our top payroll software for small business, Gusto, has an app directory on its dashboard that allows business owners to browse their different payroll software integrations and easily log in to third-party apps and tools to get those integrations set up in a matter of minutes.
3. Authentication
To access the payroll software’s API, the external system needs to authenticate itself. This typically involves the use of API keys, OAuth tokens, or other secure methods to ensure that only authorized users or applications can access the payroll data.
4. Data Mapping
Data mapping is a crucial step in the integration process. It involves defining how data in one system corresponds to data in another. For example, mapping employee IDs, names, and salary details from the HR system to the payroll system to ensure accurate synchronization.
5. Data Transfer
Once authenticated and mapped, the external system can initiate requests to the payroll software’s API to send or retrieve data. This data transfer can include information such as employee details, salary changes, tax information, and other relevant payroll data.
Depending on the integration requirements, data transfer can occur in real-time or through batch processing. Real-time integration ensures immediate updates, while batch processing may be scheduled at specific intervals, such as daily or hourly.
Why Use Payroll Software Integrations
There are many reasons why utilizing payroll software integrations can be a great tool for your small business. Some of those include:
- Provides flexibility: With integrations (as opposed to an all-in-one system), you can select the software that suits your needs and budget. You may even find freeware or free plans that do what you want and work with your payroll software.
- Saves time & money: With integrated software, your team is freed from making manual inputs or preparing spreadsheets for bulk upload. This can save valuable hours each pay run. A third-party app can often be more cost-effective than a more advanced payroll plan.
- Prevents errors: With information moving seamlessly between programs, there’s no chance of a mistyped data entry. However, anything entered wrong travels to all the integrated programs, so you’ll want to correct it and check all the programs.
Most Common Software That Integrates With Payroll
Payroll software can integrate with a host of different software, from onboarding and learning management to compliance and tax preparation. Click the tabs below for information on some of the most common integration categories.
How to Integrate Payroll Software With Other Tools
By now it’s clear that one sure way to enhance efficiency and reduce manual data entry is to integrate payroll software with other tools you’re already using or planning to use. Here’s how to integrate your payroll application with other systems:
1. Determine your integration objectives. First, you want to know your goals for integrating your payroll software with other applications. From here, you can then identify data that needs to be synchronized in your system.
For example, your goal is to “Automate the synchronization of employee data between the payroll software and the HR management system to eliminate manual data entry and ensure data consistency.”
To achieve this goal, you need several data points integrated between your payroll system and HR system including:
- Employee information
- Salary changes
- Time and attendance
- Tax withholding and deductions
- Leave management
- Employee onboarding and offboarding
2. Choose compatible software. Check for available application programming interfaces or APIs, data formats, and other specific requirements for integration.
As an example, your company uses “XPayroll” for payment processing and is looking to integrate with an HR management system. After researching, you’ve identified “HR123” as a potential HR management system for integration.
You will then:
- Review both systems’ API documentation.
- Confirm that the systems support compatible data formats for seamless data transfer.
- Identify specific requirements or limitations in both software.
3. Test setup. After determining the third-party software to integrate with, you can then create a test environment to simulate the integration scenarios. Test the data transfer to identify and resolve potential issues before implementing the integration using your live data.
For example, you can populate the test environment with dummy employee records, varying salary levels, and simulate scenarios like new hires, terminations, and salary adjustments.
4. Perform data validation. As part of the steps to integrate payroll software with other tools, it’s crucial to implement data validation checks to ensure that the transferred information is accurate.
From the previous example, you can use test cases to check if changes in employee details in HR123, like job title or department, are accurately reflected in XPayroll. You can check if a salary change in HR123 is correctly reflected in XPayroll, and that new employees added in HR123 are onboarded in the payroll system.
5. Develop an error handling mechanism. Try to introduce simulated errors to test the system’s error-handling capabilities. For example, you can purposely introduce data inconsistencies or simulate network errors to check if the integration system can appropriately handle and log errors.
You should document the test cases, outcomes, and any issues encountered during the testing. Check if there are areas that need adjustment or improvement.
6. Train employees. Train relevant personnel on how to use the integrated systems. Ensure that users understand the workflow, data entry points, and how to troubleshoot common integration-related issues.
Tips for Seamless Integration
If you’re new to using software to help manage your business, putting payroll software integrations into use can be a little intimidating. Here are a few tips to help you along the way, making it a smooth and simple process:
- Check with your provider first: Know what integrations your payroll provider already has built out and ready for you to use. If there’s something missing on that list, check with your contact to see if a future integration is possible.
- Clean your data: This is a great time to fix spelling errors, data that violates business rules, bugs, missing data, etc. Also, check formatting between programs, especially for dates, time, names, and any other information that can be displayed in many ways.
- Keep it user-friendly: If adding a software causes more work than manually putting in the information or using spreadsheets, reconsider.
- Customize: Choose software with customizations that let your HR and payroll teams decide what options work for their office, department, or individual employees. For example, salaried workers may need different function integrations than contractors.
- Test: Before going live, do test runs with your most common scenarios.
Frequently Asked Questions (FAQs)
Integrating payroll software with other tools offers several benefits, including increased efficiency, reduced manual data entry, improved accuracy, and streamlined processes. It ensures consistency across different systems, eliminates data silos, and provides a more holistic view of employee information.
To ensure data security, use secure authentication methods such as API keys or OAuth tokens. Implement encryption for data in transit and at rest. Additionally, choose tools and systems that comply with relevant data protection regulations, and regularly update security measures.
Common challenges include data mapping issues, differing data formats, system compatibility issues, and potential disruptions during the integration process. Thorough planning, testing, and ongoing communication with stakeholders can help address these challenges.
Look for tools that offer well-documented APIs, support common data formats, and have a track record of successful integrations. Consider scalability, vendor support, and any specific requirements or limitations for integration.
The frequency of data synchronization depends on the specific data and your organization’s needs. For critical data like employee information, real-time synchronization may be appropriate, while other data points may be updated daily, weekly, or monthly.
Bottom Line
If you are growing beyond the capabilities of your current system or have payroll software that doesn’t meet all your needs, you may not have to change it.
Payroll integrations cover everything from time tracking to HR support. With integrations, you can select the app that best suits your needs and budget. However, when integrating payroll software with other applications, be sure the data is clean, the connections work, and a test run succeeds before launching.