AI can help payroll teams spend less time on manual administrative work during pay week - from reviewing information and drafting employee communications to summarizing payroll trends.
Here are five practical ways you can incorporate AI into your payroll workflow.
1. Review US state tax registrations and multi-state requirements
If your organization employs people across multiple US states, changes in employee locations can introduce different withholding, unemployment, and reporting requirements.
You can use AI to compare employee location changes with the compliance guidance your organization already uses.
Try this prompt:
Compare these US employee state relocation notes against our state compliance setup: [Insert notes]. Based only on the compliance guidance provided, list anything that may require review before payroll processing, such as registration details, withholding forms, or other requirements.
This can make it easier to identify items that need further review before processing payroll.
Important: AI-generated compliance guidance should be reviewed against your organization's approved sources and requirements before you take action.
2. Explain complex payslip changes
Mid-cycle salary changes, retroactive adjustments, and new deductions can make a payslip harder for an employee to understand.
Provide AI with the relevant calculation details and your policy information to create a simpler explanation.
Try this prompt:
An employee received a mid-cycle pay increase plus a new benefit deduction. Here is the calculation summary: [Insert summary]. Draft a friendly, three-bullet explanation in plain English explaining why their net pay changed. Use only the information provided.
You can then review the response for accuracy before sharing it with the employee.
3. Review expense memos and timesheet notes
Important context can be hidden in free-text expense descriptions or timesheet notes.
Provide AI with the relevant text and your organization's policy to help identify entries that may need additional review.
Try this prompt:
Compare these expense memo descriptions against the policy below. List entries that may not meet the policy and explain which provided policy rule each one relates to. Do not introduce requirements that aren't included in the policy.
Policy: [Insert policy]
Expense memos: [Insert descriptions]
This can help surface potential issues in written notes that might not be identified through numerical checks alone.
4. Turn pay run totals into a leadership update
Instead of manually turning payroll figures into a written summary, you can use AI to organize the information into a concise update for Finance or leadership.
Try this prompt:
Here are our summary totals for this pay run compared with last month: [Insert department gross pay, overtime totals, headcount changes, and other relevant figures]. Draft a three-bullet executive update highlighting the main variance drivers and trends. Base the summary only on the figures and context provided.
Always review the generated summary against the original payroll data before sharing it.
5. Turn regulatory information into an action checklist
New tax rates, statutory benefits, or overtime requirements can involve lengthy documentation.
AI can help summarize information from an approved source into a checklist for your payroll team to review.
Try this prompt:
Based only on the regulatory information below, create a short checklist of the payroll setup or audit items our team should review. Do not recommend changes that aren't explicitly supported by the information provided.
[Insert regulatory information]
Use the checklist as a starting point for review rather than as a substitute for your organization's approved legal, tax, or compliance guidance.
Keep your data safe
Before using any AI tool during payroll activities, follow your organization's policies for handling employee, payroll, financial, and other sensitive information. Only enter information that your organization permits you to share with that tool.