Many successful companies’ HR departments function like a duck on the water, smooth sailing on the outside while busily paddling away in the background. This is especially true for companies who rely on the HR department to manage their payroll.
While payday is the thing many employees wait eagerly for, payroll on the other hand is what makes HR professionals want to scream in frustration. Payroll can be a nightmare for business' HR function with serious liability and when done poorly, the business can suffer from legal backlash.
In theory, payroll is simply paying your employees accurately and on time, but in reality the demand is a lot greater for anyone tasked with processing payroll. Depending on the size of the company and the number of regions your business is involved in, the stress of processing payroll can add up seeing as there are many legal regulations payroll leaders need to be aware of when processing payroll.
Since thousands of businesses across Asia see proper compliance and performance a priority to their company’s development, they choose to outsource their payroll process to professional HR servicing companies to ensure quality. By outsourcing to a reputable payroll processing vendor, HR leaders can have an ease of mind that their payroll is processed properly and in a professional manner that is up to market standards.
Measuring the Actual Time Spent on Payroll Processing & Payroll Mistakes
- 25% of payroll leaders spend more than 50% of their time on day-to-day payroll activities
- 67% looking to eliminate manual work involved with payroll processing.
- 45% of companies plan to move payroll to the cloud in the next 2-3 years.
Source: Namely & HR in Asia
Indeed, it can be a heavy burden fro HR teams that have to handle internal payroll processing on top of employee engagement projects, staff benefits, talent acquisition, and other HR related responsibilities. As a result, it can be easy for HR professionals to make the following mistakes when processing payroll.
Below are the 8 common mistakes HR professionals and businesses can make when processing payroll in-house.
1. Missed deadlines
One of the simplest mistakes payroll professionals can make is to miss deadlines. While this problem in principle is relatively easy to avoid, payroll processing can become increasingly difficult with company growth, multiple locations, and employees sharing time across numerous cost centers, which can hinder a timely delivery. From cross entry validation, information handling, to corrections, all these takes time and can impede on a timely delivery, resulting in possible legal penalties.
Thanks to the growing trend of flexible working arrangements and contingent workforce businesses can more effectively manage workload, while the toll falls on HR professionals and they are tasked to process payroll. A common payroll mistake is with the classification of employees, which determine the tax responsibilities. Depending on the location, the responsibilities a company has towards a permanent, freelance, contractors, and temporary staff will differ.
3. Payroll taxes
A problem that is affected by the previous point is with payroll taxes. Be it deduction from an employee’s wages, or taxes paid, payroll professionals are required to accurately calculate the company’s taxes obligations, this involves a thorough understanding of the policies and regulations.
4. Poor record keeping
Most locations mandate that businesses have to have a proper record of their payroll for a specified amount of time. While this problem isn’t as apparent as the others, if the company is audited where documentation is requested by authorities, this may become a problem.
5.Over reliance on technology
With the rise of automation technology, there are many payroll processing softwares available in the market that helps businesses simplify their payroll process. However, a payroll mistake businesses can make is over relying on technology to clean up the data and carelessly inputting the information. As the old saying goes, garbage in garbage out. If the information that is fed into these payroll processing systems are not accurate, HR teams may find that they will have an even harder time correcting their payroll.
6.Insecure handling/ no adequate back up
The perks of using a professional payroll processing service is with the guarantee of security. Unlike payroll that is done in-house, there is less risk of fraud or conflict of interest when payroll is outsourced to a reputable HR vendor. With in-house processed payroll, there is also the problem with shared knowledge of salary, which can be avoided when the payroll is outsourced, and processed externally.
Another payroll mistake businesses run into is with the problem of inadequate spyware and technology to protect the company’s payroll data against hacks as well as a lack of adequate back up.
Keeping up with the different regulations and laws can be tiresome, and when payroll is not your teams only responsibility, it can be a burden for HR and payroll professionals. This is exaggerated when the business spans over different locations which can lead to mistakes and complications in reporting when the HR team is not aware of the latest legislative updates.
8.Wrong Calculation of time ticket entries
For retail businesses or restaurants that rely on time attendance to calculate pay, payroll professionals will need to be extra careful in calculating payroll as these settings are especially prone to payroll mistakes. A lot of time can be wasted in the process of finding errors if there are any incorrect entries or calculations.
Heavy tasks for experienced staff
A great way to avoid making these common payroll mistakes is by relying on an experienced staff who is familiar with the local rules and regulations relating to payroll. If your HR team chooses to process payroll in-house, then it would also be in your best interest to train up less experienced staff so the responsibility doesn't only fall on one person.
Secure your business with professional HR outsourcing
For further security, a great option for businesses is to outsource their payroll to a professional outsourcing agency. Before signing on with any vendor, remember to properly investigate the terms of what they can and cannot offer and whether their service fully matches your payroll needs. Don’t hesitate to ask for case studies and testimonies of others who have partnered up with them to better evaluate their service.
Keep up to date
Whether your company processes in-house or through a professional payroll outsourcing agency, a way to secure your HR is to make sure that the system you’re using is up-to-date so that it’s protected from any possible hacks and attacks.
Links International is an industry leader in innovative HR outsourcing with services such as payroll outsourcing, visa application, Employer of Record (EOR), recruitment and more! Contact us for more information on how we can help leverage your HR function.