Best Practices that Improve Your Payroll Process

• Identify the best practices to improve your payroll process.
• Inefficiencies in your payroll process result in delays and errors in computations.
• Determine the tools you can use to boost the efficiency of your payroll process.

Your payroll process can be a source of headaches for your team. Late releases of salaries, mistakes in computations, and complex steps are problems you might encounter. This can frustrate your employees and can be one of the reasons they leave for another company. It’s important to improve your payroll process so that it’s more efficient, no delays, precise computations, and simpler steps.

How do you improve your payroll process?

Make and Follow a Payroll Schedule

Create and follow a schedule to improve your payroll process. This establishes the pay cycles your employees (both part-time and full-time) can expect. Companies often follow a bi-monthly schedule, but you can implement weekly, monthly, or several payouts within the month. This depends on the number of employees you have and if you have multiple part-time employees. Before establishing a schedule, determine the time it takes to process your payroll. Processing times that take longer than expected might lead to delays in the release of salaries. The schedule you decide on must factor in administrative and processing times. Be consistent with the schedule you choose.

Create Simple Policies

Mistakes in payroll processing occur when your employees are unaware of or misunderstood the policies in place. One of the reasons this happens is your policies are too complicated. Simple policies can improve your payroll process in ways such as no penalties incurred, correct computations each release of salaries, and proper classification of employees to name a few. You can simplify your payroll policy by implementing the following:

1. Provide a detailed payroll process overview for clarity.
2. Classify employees accordingly (for example full-time, contractors, and part-time employees).
3. Salary computations and totals based on job description and level.
4. Calculations and processing of benefits and promotions.
5. Practices that your company implements when dealing with computation errors.

These are some of the possible inclusions you can make when drafting your payroll policy. There are others you can include based on the needs of your company.

Communicate Your Policies

You might have the simplest payroll policy; however, if your employees don’t understand or don’t know how to implement it properly, it won’t be as effective as you want it to be. Communicate your new or updated payroll policy through the appropriate platforms to avoid misunderstanding. Doing so also allows your team to implement it effectively. You can send email blasts, direct messages to teams, or schedule a meeting. Delegate tasks and announcements to managers so they can guide their own teams.

Budget for Payroll Software

Manual processing of payroll is prone to mistakes because of human factors such as stress, fatigue, miscommunication, and others. Invest in payroll software that allows you to automate and simplify some of the tasks your accounting team does. Software allows them to manage data effectively. They can input numbers and personal information and access these at their convenience. They can integrate attendance and time of your employees, comply with tax laws, and send direct payouts among other advantages. Set a budget aside to purchase the latest payroll software that your team can use. Once you make the investment, provide them with training and certifications to use the tools at their disposal effectively.

Direct to Accounts

Implement direct deposits to release the salaries of your employees on time. This makes it easier for you and them to monitor salaries and identify possible miscalculations. It’s also more convenient to correct mistakes when you automate and deposit directly to employees’ accounts. This approach reduces administrative tasks and cuts costs. Identify which payroll software provides your company with the most benefits and features you might need.  

Collect Feedback from Your Team

You can improve your payroll process when you get feedback from your employees. Their opinions about the system you use provide you with insights you may miss. They can give you a different perspective because they’re the ones that go through your payroll process regularly. They can identify which areas it can improve on, and which ones still work. They can pinpoint inefficiencies and suggest ways you can simplify and boost your process’ efficiency. Working with your employees on improving payroll allows you to implement the right changes and build company culture.

Incorporate Current Systems

Some departments have common interests and need access to the same sets of data to make decisions, create a budget, and make forecasts. Integrate your current payroll process and related systems with the software and tools you invest in to ease and simplify everyone’s workload. Create a workflow that simplifies and connects related tasks. Provide access to individuals that need the same information. Cloud-based tools are a convenient and easy to use option to store and access data. Data sharing allows your human resources team to screen potential employees using your payroll data. Your finance and accounting team that does the payroll can use the same data to make projections and create a budget.

Audit Your Process Regularly

Your current process might be working for you now, but changes in policies, employee turnover, new technology, and/or additional employees might lead to inefficiencies and problems you need to address. An audit enables you to identify inefficiencies, areas for improvement, compliance deficiencies, and changes you want to make to boost your payroll process’ effectiveness. Consider auditing your payroll once a year.

Consider Outsourcing to a Service Provider

If you lack the expertise and experience in processing payroll, you might want to consider outsourcing this aspect of your company. Manila Bookkeepers has first-rate accounting services you can rely on. Our team has the experience, certifications, and expertise you are looking for to improve your payroll process. They can identify inefficiencies and deficiencies. Our team can address these and boost the efficiency of your process. They can establish a schedule for you, use the appropriate software, and provide other services you might need.

Manila Bookkeepers is an accounting company in the Philippines that can assist you whenever you need CFO, management accounting, bookkeeping, and other related services.