How to Use Chat GPT for Payroll

Payroll is the unsung hero of the finance and accounting world. Without it, companies would have no employees. Or at least highly disgruntled ones. When everything goes well, nobody thinks about it and the department is only visible when something goes wrong.

Federal, state, and local regulations continue to get more complicated. Employees are increasingly working from home or remotely from different states increasingly the complexity of maintaining compliance. In combination with an increasingly litigious employee base, these factors make the payroll function harder than ever before.

We explore some use cases of how to use Chat GPT in a payroll department to speed up processing and provide the best possible experience for internal customers.

What is Chat GPT

Chat GPT is an AI powered Chatbot developed by OpenAI, and stands for “Generative Pre-trained Transformer.” Transformers are a technique used in machine learning that allow computers to assign weights to the context of questions being asked. They help chat bots run faster and provide more relevant than what was previously possible.

The other major differences with Chat GPT vs prior chat bots is that it has been trained on absolutely massive amounts of data, allowing it to answer questions about general topics available on the internet as well as a depth of knowledge in computer programmer and technical fields.

The Chat Bot is contextually aware of a conversation and can answer follow-up questions making it an incredibly powerful tool for quickly researching topics, and finding the information that you need quickly in the way that you would normally converse with another human.

How to use Chat GPT to Improve Payroll Reporting

Reporting is the life blood of a payroll department, but if you find that your team does not have the time to produce the reports that it needs to then Chat GPT may be able to help enable you take your payroll reporting to the next level.

Chat GPT can help your team save time on the day-to-day and reduce the amount of time to create reports. This creates a virtuous cycle of having more time to add value through reporting, reduce errors, and give your team even more time in the following payroll cycle.

Benefits of Improved Payroll Reporting

If it is not a primary focus for your team, you should consider some of the following benefits of timely and easily accessible reporting.

    • Improved transparency and potential reduction of overtime expense
    • Payroll error prevention for coding, tax withholding, other changes
    • More accurate benefits accounting and error reduction
    • Faster and easier variable compensation calculations

Using Chat GPT with Microsoft Excel

Microsoft Excel is one of the most widely used yet underutilized software for reporting and process automation. Many people do not invest the time into learning how to best utilize the software.

Luckily, Chat GPT can guide people through various processes within Excel. For example, you could ask it to provide several ways to consolidate Excel Spreadsheets and it will immediately give you actionable guidance, saving you time and helping to automate processes.

Using Chat GPT with Power BI, Tableau and Other Reporting Tools

Two of the most common solutions for business intelligence and real time reporting are Microsoft Power BI and Tableau. Many businesses have already made investments in these solutions, but the Payroll group is often left out or at the mercy of a centralized Center of Excellence to build out the reports that they need.

For both of these solutions, Chat GPT can be utilized as a quick reference point to help your team take control and build out their own live reporting dashboards.

We put together the following guides related to using both platforms in conjunction with Chat GPT. Even if you don’t use these platforms, Chat GPT is well versed in many popular reporting tools and can help you take advantage of the tools that you already have.

How to use Chat GPT for Payroll Taxes

Most payroll processing companies such as ADP, Paylocity, Paycom, and UKG will help businesses maintain the appropriate tax rates for various jurisdictions. However, there can be times when you need to quickly reference them.

We recommend switching from Chat GPT to the Microsoft Bing Chat which runs a modified version of Chat GPT-4. It’s more up to date, and cites the sources of information that it’s pulling from. As you can see, there is some nuance to the answers that Bing provides, but you can answer more probing follow-up questions as needed.

Bing Chat GPT Explaining Local Payroll Taxes

Using Chat GPT to Calculate Final Paychecks

Most payroll professionals will have no problem calculating a final paycheck. There are multiple ways to pro-rate a final paycheck, and regardless of the standard method used and whether it favors an employee or employer it can lead to a potential dispute.

The following example from Chat GPT explains how to calculate pro-rated final pay for an employee that makes $58,000 per year. What makes the example so impressive is how it explains the pro-ration in a step by step easy to understand way that could be provided to a former employee.

Chat GPT Explaining an employee's final paycheck calculation

Using Chat GPT to Comply with Regulatory Changes

The biggest challenge of payroll is keeping on top of regulatory changes for all of the jurisdictions that you have employees in. The major payroll processors like Paylocity, UKG, and ADP provide services that help companies stay on top of these changes but the amount of detail and communication that they provide are hit or miss. However, it is first important to understand the limitations of Chat GPT.

Limitations of Chat GPT

Chat GPT was trained on a dataset up through September of 2021. This means that while it is great at answering questions about general knowledge, the information that it is capable of providing is dated. This limits the usefulness of Chat GPT for recent events.

Using Bing Chat Powered by Open AI Chat GPT for Current Events

It’s important to know that Chat GPT is not a single service or a single website. The technology backing Chat GPT is available through an API connection through OpenAI as well as Microsoft Azure Open AI Services. The availability of an API means that people with the technical skills or patience to prompt Chat GPT to guide them through how to use an API can create their own custom applications.

For those of us without that level of patience, Microsoft’s Bing Search Engine utilizes the latest version of Chat GPT-4 and is trained with current data. You can use Bing Search to find and summarize information that’s up to date. It has the one drawback of providing answers that are not as long or as elaborate as Chat GPT from Open AI.

In this example, we asked Chat GPT about recent major changes to California payroll laws. Bing does an excellent job of not only describing what the changes are, but citing its sources and prompting you to ask follow-up questions.

We wouldn’t recommend fully relying on an AI based Chat Bot for California Legal Compliance, but it is a good starting point for broad strokes on what you should be generally aware of.

Bing Chat Explaining California Payroll Law Changes

Using Chat GPT for Multi-Lingual Translation

Language barriers can make simple conversations much more difficult in the workplace. Unless you have a native speaker on staff that is available to help, many questions go unasked or unanswered.

nChat GPT is capable of answering questions in many different languages. You can copy and paste from an employee handbook for highly accurate translations, or ask Chat GPT to answer questions in someone’s native language. In the example below, we asked Chat GPT to answer a question in Spanish while it can also convert text to many other languages.

Chat GPT Explaining How Local Payroll Taxes Are in a Different Language

What is the Future of Chat GPT and Payroll?

At the moment, we have not heard of that many use cases specific to Payroll where Chat GPT or similar technology will be integrated directly into systems. However, we can infer what is likely to happen based on recent trends.

Microsoft Announces Microsoft 365 Co-Pilot

Co-Pilot is the brand name given to Microsoft’s upcoming implementation of Chat GPT in their flagship Office Suite of products and Power Platform. The implications of this are huge, as it will enable teams to ask questions about their data, ask Excel Spreadsheets to complete tasks in common language, and will be able to be trained on datasets that are company specific.

For example, imagine an internal corporate Chat Bot that has been trained on this year’s most recent Employee Handbook. You could use Microsoft’s easy to use Chat Bot Software, Power Virtual Agents, to answer questions in a way that a human would but referencing the written material that already exists.

Benefits of this approach are that it offloads question volume that would otherwise go to the payroll department, and also provides employees instant answers to questions that they have. This could alleviate a point of frustration for both group.

Chat GPT Style Integrations are Coming to Your Existing Software

With the amount of potential time savings that Chat GPT is going to bring to general office software, both from Google and Microsoft it’s only a matter of time until direct integrations occur with popular payroll software as well.

We would be surprised if some of the biggest payroll companies are not already working on integrating this kind of technology. Beyond answering routine employee questions, it could also answer more general questions about how tax withholding works, or could even guide someone through filling out their onboarding paperwork with some training of IRS documents and standardized forms.

There will hopefully soon be a day when people can get quick information like the note below explaining their W-2 to them, and with the capability of asking detailed follow-up questions!

Chat GPT Explaining box 12 on an employee W2

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