6 Tips For Effective Payroll Management in 2021
22 Dec 2020
How you manage payroll is a crucial function in any organisation. And effective payroll management can be a challenge even with the most sophisticated payroll software.
Managing payroll effectively takes more than just a robust payroll software. It requires clearly-defined processes, accurate employee records and adequately-trained payroll staff.
Ineffective payroll processes can be slow and overly complex, resulting in frustrated payroll staff. In worst case scenarios, where payroll ends up being calculated incorrectly or delayed, it may result in angry employees.
If you are looking to maximise the efficiency of your payroll department, here are some helpful tips to consider:
Set up direct transfer of payroll taxes
Depending on the countries whereby your organisation has operations in, you may have the option to set up a direct transfer of monies into employees’ tax and pension funds. This facilitates timely payment of statutory contributions, payroll transparency as well as easy tracking.
In Singapore for instance, employers have the option to set up a direct debit instruction, whereby the relevant statutory board is able to deduct funds from the organisation’s corporate account on a designated date each month. Similarly in Hong Kong, provident funds are made to the organisation’s trustees, whereby they then have the option to set up a direct transfer instruction for statutory contributions.
Integrate payroll with your existing HR system
Payroll processing involves a combination of multiple compensation data, such as employee’s data, monthly wages, fixed allowances, any ad-hoc deductions, timesheet and benefits. Most of the time, this data is stored in the HRIS system. By integrating your payroll software with your organisation’s existing HR system, you are able to extract relevant employee details for payroll processing. This helps to ensure accuracy when processing the monthly payroll cycle.
At the same time, integrating payroll software with your existing HR systems ensures that any changes to employees’ records are captured during the payroll processing. Changes such as promotional increment, performance reviews, training records, and resignations will be reflected during the monthly payroll processing cycle. This helps to reinforce payroll accuracy and minimise potential payroll calculation errors.
Verify that all employees are classified correctly
Incorrect employee classification is one of the most common reasons why salaries are wrongly calculated. This is particularly crucial for organisations that hire contractors and part-timers. The salary structure for this group of employees may be different from that of a full-time employee – they may be paid on an hourly basis or they may not have met the minimum salary requirements to be eligible for statutory contributions. Incorrect classification of your employees may have implications on your payroll calculations as well as during statutory and tax reporting.
Review your employee classification on a monthly basis or before each monthly payroll cycle to ensure that employees are classified correctly. This includes reviewing those who are independent contractors, permanent residents, and interns.
Ensure accurate and up-to-date employee records
Similar to ensuring that your employees are correctly classified, it is imperative to ensure that your employee records are up-to-date. Set up an employee portal which allows employees to enter and update their personal details whenever there are any changes to their employee records, such as marriage, adding of a dependent, change in residential address or change in bank account details. This helps to take the mundane task of having to manually update employee records off HR’s hands.
Concurrently, make it part of the onboarding process to collect accurate employee details and have the employee verify that all the details provided are accurately reflected in the HR system. When you have updated and accurate employee details at the very beginning, chances are that your payroll processing will have minimal errors.
Leverage on a payroll software
Thanks to the rapid advancements in payroll software, processing payroll today has become a lot faster. The catch is to find one that is right for the organisation. There are numerous software vendors in the market that are able to cater to your payroll needs. Concurrently, most are able to automate your manual and administrative payroll tasks such as data entry of timesheets and expenses claims.
While there are plenty of features that payroll software can offer, it is essential to identify your payroll needs and go with a payroll software that is able to meet these needs.This can then help your payroll processes to be truly efficient instead of merely going with fancy features that are hot in the market.
Document your payroll processes
Documenting your payroll processes is a major step towards effective payroll management. This strategy helps you to audit and review your existing payroll processes, identifying pain points and bottlenecks. Once you have documented your payroll process, share them with your payroll team to ensure that everyone understands their role.
Maintain a standard payroll manual within your payroll department. This should include all the payroll processing steps in detail and well as the reporting and salary disbursement process. It might also be helpful to include in contingency plans within the manual to account for unforeseen situations.
Being able to effectively handle your payroll processes is a reflection of the team’s competency and the organisation’s brand. It also signifies the organisation’s ability to retain employees by ensuring that they are being paid accurately and on-time. With efficient management of your payroll processes, it frees up time for your payroll team to focus on other pertinent matters.
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