Managing payroll is a highly meticulous task. Even the most seasoned payroll professionals may make mistakes from time to time due to the ever-changing payroll legislations and large volumes of employee data. Yet, it is imperative to ensure that payroll is done precisely and accurately – the most minor error could potentially result in expensive damages for the organisation.
Some organisations believe that the best way to manage payroll effectively is to run payroll in-house, allowing them to be in complete control of payroll processes. However, payroll processing is often not as basic as it seems especially when handling large volume across different regions.
Here are some of the top 3 challenges that most payroll professionals face on a daily basis and how to effectively address them:
Adhering to ever-changing payroll legislations across the region
Payroll legislations across all countries are constantly changing, adding on to the complexity in processing payroll. According to research from TMF Group’s 2020 Global Business Complexity Index (GBCI), legislative complexity associated with HR and payroll varies considerably between different jurisdictions. It then falls upon HR to ensure that they constantly keep abreast of the changes in payroll legislations across the region to ensure compliance with the respective laws and regulations. Majority of the time, non-compliance can result in hefty fines imposed on the organisation.
Given the challenge in having to stay up-to-date with legislations that are constantly evolving, the common solution that most payroll professionals turn to is outsourcing their payroll function. By engaging a third-party payroll vendor, it eliminates the need to constantly monitor the individual country’s payroll landscape for any legislative changes. Most payroll vendors are able to stay on top of any major or minor payroll changes and incorporate any changes into their payroll software. This helps to ensure that organisations who utilise their payroll software comply with the ongoing changes in payroll or tax legislations.
Processing payroll for high volumes of employees
Processing payroll consumes a large chunk of time, even if it is done with an payroll software. This is because there is pre-work such as timesheets and data changes consolidation that has to be done before the payroll run. It becomes even more time-consuming if there is a need to process payroll for a large group of employees. The time spent on reviewing the accuracy of payroll records, employee timesheets to salary calculations and deduction, and compliance with statutory laws and legislations – all these hours can be used to help support the business in terms of growth and expansion.
By engaging an outsourced payroll vendor, these administrative tasks can be passed on the vendor, where the payroll vendor will be responsible in ensuring accuracy and compliance. Companies who use Human Capital Management (HCM) software may face the challenge of synchronizing their employee data on the global HCM system with the payroll data in the local payroll systems. Maintaining accurate employee data across multiple systems, often manual re-entering or upload the same employee data from one system to the other. It can result in the loss of several days of HR productivity each month as well as manual mistakes. Some companies outsource this process to payroll vendors to helps ensure that the right employee and payroll data is fed into internal systems. Through state-of-the-art data integration technology, some payroll vendors may have their payroll system integrated with the HCM system, which enables easy transfer of data between the platforms.
Poorly-managed payroll workflow process
Payroll is a time-sensitive process and a small delay can result in inaccurate salary disbursement and unhappy employees. As with the case of unskilled staff and an inadequate payroll system, a disorganised payroll workflow process can be highly disruptive. This may result in payroll mistakes and create opportunities for fraudulent activities. Have a standardised payroll workflow and ensure that there are appropriate controls in place. Concurrently, enforce these standard operating procedures on your staff to minimise the risk of payroll mistakes.
Leveraging on an outsourced payroll provider helps to automate these administrative tasks while ensuring that payroll and employee records are accurately entered into the system. Payroll software providers also use a cloud-based platform, which provides an added layer of data security to protect sensitive information.