Collaborative Risk Analysis Finds Big Benefits in RPA
Headquartered in Rochester, New York, Paychex provides payroll and human capital management services to more than 680,000 companies in the United States. One of the services the company offers is payroll tax administration, through which it withholds wage taxes from the paychecks of a client’s employees and then files and pays those taxes on their client’s behalf.
Unsurprisingly, for a company that files a large number of customer tax returns, Paychex also files many amended tax returns if the information on the original tax return changes or is found to be incorrect. A few years ago, individuals across the company managed these changes in a very manual process.
“The employees at our on-site locations had to manually submit requests to complete the changed returns,” says Ken Bersani, manager for operational risks at Paychex. “We changed about 100,000 returns every year. Usually the customer tells one of our payroll specialists that something has changed in their business. The payroll specialist would see that the change would require change notices that we had already filed for them, and someone from staff would send a change request to our department to start the process. The on-site location would also need to adjust the customer statement to reflect the fee we charge for changing a tax return. “
Bersani and his team contacted the on-site task force to reduce the risk and streamline processes. In a cross-functional workshop that dealt with the identification of vulnerabilities, the requests for changes to the tax return came to the fore. The operational risk team immediately saw an opportunity to significantly increase efficiency.
“We have a very robust self-service tool, Paychex Flex, which our customers can use to do their own payrolls online, often without any interaction with our staff,” he adds. “However, when we had to change a tax return, the process wasn’t automated at all. We had more than 60 employees in the various groups of companies who spent 10 to 15 minutes on each of the 100,000 changed returns. They could have spent this wasted time on more value-added activities. There was also a risk of human error. It just didn’t make sense for this to be such a manual process. “
The operational risk team developed a plan to centralize and standardize the process for requesting changed rates of return. They were also interested in adding as much self-service and automation to the process as possible. At that time, a demonstration of test software was shown that the Paychex IT group had developed in-house.
The tool brought robotic process automation (RPA) to the software development process. Eric Weber, business intelligence analyst for operational risk at Paychex, describes it as a loaded Excel macro that simulates human interactions to ensure that the company’s various applications are responding appropriately. “We recognized the potential of this technology to proactively identify ROI that need to be changed, rather than relying on our on-site staff to generate and submit inquiries,” says Weber.
He and his colleagues used the IT tool to create a robotic process that both creates change requests and adapts billing to them. When a customer makes changes to previous tax returns in the self-service portal, the solution generates a new instance of the change request form. It automatically fills in about 85 percent of the fields on the form and then generates an alert that proactively reaches out to field workers to request the little information that remains.
“The process of requesting a change took 15 minutes. Now it takes 2 minutes, ”reports Weber. “At the same time, the tool automatically adds the fee for the changed return to the customer’s invoice. We have seen a 25 percent increase in modified returns filings since introducing this tool as it proactively identifies any situation where a modified return is required. As a result, this has had a significant impact on the increase in gross sales. “
Bersani reports that employees save a total of 6,000 hours per year on tasks related to generating and processing modified returns. “Our field service teams now have a lot more time for customer interaction than for administrative background work,” he says. “Our quarterly employee survey shows that their job satisfaction has increased significantly as they now focus on helping customers.”
Weber mentions another advantage of process conversion: improved accuracy. “No matter how careful people are, there is always a risk of error in the human element,” he says. “By removing almost all manual work from the process, this risk is minimized. We know that when the tool generates an alert, something has actually changed in the self-service system. We can trust that everything is correct. “
Bersani sees this project as an example of the benefits of broadening the horizons of the risk management function. “If the risk group is involved in all facets of the company, additional areas of opportunity can be identified,” says Bersani. “Our operational risk group worked with IT to understand their testing tool and we saw an opportunity to reduce the risk by introducing automation for modified tax returns.”
He adds that Paychex’s risk surgery team is not resting on its laurels. “This project also allowed us to advance what we learned and bring the same kind of automation to other risk areas,” concludes Bersani. “Now all the disciplines in our risk department are looking at the automation tool and figuring out how to best use it.”