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Spotting Red Flags In Your Payroll Process

Payroll function is often the biggest expense within the organisation. It is also one of the most stressful roles as it requires thorough and meticulous handling of employees wages. Close of half (43%) of organisations globally have very low or limited process standardisation in payroll. This simply adds on to the complexity of the payroll function.

So when is the right time to ask for help? Here are some payroll processing red flags to watch out for:

Payroll mistakes occur frequently

When it comes to payroll, there is simply no room for mistakes. If payroll mistakes occur frequently, it is a major red flag in your payroll process.

Common payroll mistakes include incorrect employee records, inaccurate payroll calculations, and missing salary components such as overtime or allowances. These mistakes have downstream impacts on employees salary calculations, which can ultimately lead to employees’ dissatisfaction or even employees quitting.

Start by identifying the root cause of these payroll mistakes. Is it time to upgrade your payroll software? Does your payroll team require refresher training on computing the various salary components? Once you have identified the cause of these issues, it becomes easier to conceptualise solutions and measures to rectify the mistakes.

Salary payments and tax filings start falling behind schedule

Timely salary payments are something that employees look forward to. When salary payments are delayed, employees are bound to be unhappy. Likewise, organisations are obligated to submit statutory contributions and tax filings on time. Late tax submissions can incur hefty fines on the organisation. When these situations occur, it is a major red flag.

If salary and tax filing deadlines are issues that the payroll team struggles with, it may be best to engage a payroll specialist that manages this aspect of payroll. Alternatively, outsourcing salary disbursement and tax filing to an external payroll provider can help to ease the burden on the payroll team. Most payroll providers are able to keep track of payroll and tax submission deadlines, minimising the occurrence of late salary payments and tax non-compliance.

Increased dissatisfaction among employees

An engaged and motivated workforce is one of the key growth drivers for any successful organisation. When payroll issues start creeping up, this may lead to dissatisfaction among employees. Concurrently, employees may start to undermine the organisation’s ability in ensuring the well-being of its employees.

Investing in a robust payroll strategy helps to reinforce your organisation’s commitment in ensuring the welfare of employees. In fact, organisations with a well-defined payroll strategy consider the employee experience by focusing on related payroll tools which are likely to impact the end-user. A clearly-defined payroll process along with a well-trained payroll team or outsourced payroll provider can contribute to a smooth payroll process for the organisation in the long run.

While payroll mistakes are inevitable, that does not mean that it cannot be prevented. Although an easy solution may be to hire a payroll specialist or engage an outsourced payroll provider to manage some aspects of the payroll process, it is imperative that your organisation is attuned to possible gaps in the existing payroll process. Periodic review of your entire payroll process can help business leaders to identify bottlenecks and pain points early on, and outline measures to mitigate these issues. This ensures that your payroll process is consistently well-defined, facilitating a smooth end to end payroll process.

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