7 Best Practices For Payroll Processing
Payroll processing is among the most important tasks of any company and directly affects each and every employee. It’s a periodic operation in which effectiveness is judged by the ability to pay accurately, promptly and with complete statutory compliance. It’s beneficial for any business irrespective of size, to adhere to a set of best practices, honed through years of experience.
1. Thorough policy - A thorough and detailed payroll policy is imperative for any company. It should contain every aspect like salary cycles, pay grades (if any), reimbursements, bonuses, compliances, etc. Once formulated, this policy should be implemented and understood by every employee. There should be no discrepancy and ambiguity amongst the workforce. The benefits of an all-encompassing policy is a structured and streamlined workflow that helps both the employee and employer.
2. Integrated systems - An efficient system is one that integrates all relevant branches under a single umbrella. As it stands, companies use either electronic or manual entries for attendance marking and similarly for leave. At the time of processing the payroll, this data is extracted and then with manual supervision, merged and calculated for each employee.
An alternate and better approach would be to opt for a software that seamlessly works across the board. This software will automatically implement real-time attendance and leave inputs while adhering to the preset policy and its various rules, without human intervention.
3. Automate - The entire process of payroll can be a long and drawn out task. This is why it’s absolutely necessary in the competitive market of today, to automate. A good software can automate multiple workflows that run either according to a policy or a particular logic that you define. The time savings through this are immense and can be better used for other important tasks.
A chief concern of many companies still using traditional methods is the person-dependant nature of their payroll. There are severe gaps in communication between the HR and finance departments, thus leading to payroll that’s peppered with errors that keep piling up. A cloud based software runs on pre-defined workflows that require little or no intervention.
4. Statutory compliance - Whichever side of the fence you choose to be on, will decide the fate of your company. With companies sprouting like mushrooms, the government in return, is keeping an eagle eye for non-compliance. Every company is required to abide by certain laws. Very often these are disregarded citing a lot of back-end work and the lack of man-power. One may get away for the short term but eventually as they say, the law catches up.
A HR & Payroll software that’s 100% statutory compliant is always abreast with the latest amendments to the pertinent acts; Shops and Establishments, Factories, etc. and is automatically integrated into the system so there’s no scope for defaulting. Calculations and implementation of PF, PT, IT, ESI is accurate and completely online. The software goes as far as generating a bank JV. So at the end of the day, you can be rest assured that your company is 100% compliant, through no effort from your end.
5. Streamline pay cycles - Many companies have multiple pay cycles to cater to varied sta. What this does is eat up a lot of time, eort and cost to replicate the same process repeatedly. It may be impossible to in certain cases but as far as possible, it’ll pay o to process payroll once and for all. The time saved can be used to concentrate on more strategically relevant tasks.
As far as possible, try to have a single method to deposit salaries. In today’s climate of ‘online’, companies opt for direct deposits which is good. However, there are still a substantial amount who still use checks (or cash but I won’t get into that). Back in the day, checks were best practice due to lack of other options. Today though, online transfer is ideal. It benefits both the employer and the employee who’s happy to not have to wait for a day or two till the check clears.
6. Efficient reporting and analytics - To be able to instantly generate reports on things like expenditure, bonuses, etc. is a key tool that can help managers and other decision makers make crucial calls. Adopt a robust tool that lets you slice and dice and watch performance levels climb. The ability to make instant decisions based on actual data and with no eort, is something a good payroll software is equipped with.
HR and business analytics provides vital data in an instant which makes it easy to spot areas in need of attention. Get all the information about employee status’, attrition, statutory costs and multiple other relevant fields from a single location. Ultimately, it’s a tool to keep you highly informed about the status of the four corners of your company, without breaking a sweat.
7. Opt for a payroll software - A good HR and Payroll software is like comparing 4G internet to the archaic dial-up. It can do so much more at a fraction of the time. It covers nearly every aspect of HR and the corresponding payroll. SaaS is on the rise and due for exponential growth in the coming years. Companies world-over are benefitting from this successful model.
Processing payroll can be cut short from weeks, down to under a minute. It doesn’t take complex math to calculate the savings potential. A key draw is that it’s highly cost-effective being cloud software and access to all data is encrypted.
While great measures are taken to hire the right talent, it’s equally important to improve the systems within. Optimizing your payroll processing is the ideal place to start as it covers almost every aspect and is relatively easy to do. Once all the systems are in place, you’ll soon see a rise in productivity that eventually leads to an increase in revenue.
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