The Six Steps to a Streamlined Business
Although the payroll function may be relatively small in terms of the number of staff in many companies, there are many advantages to optimising your payroll administration. Reviewing your procedures and work tasks can make the payroll department more efficient – leaving more time for value-creating and strategic tasks in payroll and HR.
In some companies, the payroll department is a single person where only the payroll administrator can access the payroll system. They will perform the same tasks monthly and annually without anyone questioning the procedures or trying to improve them. Because after all, the main thing is that the salaries are paid on time, right?
Well, what if that person becomes sick or leaves without notice? How would their replacement know which procedures your particular company follows, and what happens to your employees’ salaries?
It is evident that payroll administration requires more optimisation than many payroll managers and their companies realise. However, before we dive into the six steps for streamlining your business’s payroll, let’s explain some key points about this critical business process.
What Is Payroll and How Does It Work?
Payroll is the compensation a company owes to its employees for a specific period or on a particular day. It is typically administered by a company’s accounting or human resources departments, while the owner or associate might handle payroll in a small firm.
Payroll processing, employee benefits, insurance, and accounting functions like tax are increasingly being outsourced to specialist organisations. Smart companies looking to enhance their payroll, save time and reduce compliance risks are turning to payroll specialists for custom solutions that fit their needs.
Companies must, however, conduct accounting activities to record payroll, withheld taxes, bonuses, overtime compensation, sick time, and vacation pay.
Many businesses use outsourced payroll services like MASA to keep track of their employees.
Payroll services are outsourced by many medium and big businesses to simplify the process. Employers keep track of how many hours each employee works and report this to the payroll service. The gross amount payable to the employee is calculated by the payroll service on payday based on the number of hours or weeks worked during the pay period and the pay rate. The service deducts taxes and other withholdings from employee earnings before paying them.
Here are six strategies to make sure your payroll is meeting your company’s needs to the best of its ability:
Map your work processes
One initial step towards more streamlined payroll management is to map your current pay and HR processes. It may seem like a time-consuming job to go through each work task in the process, as there is a wide array of other essential tasks that need attention. However, setting aside time to critically study all of the work tasks in the payroll department will clearly show which tasks can be streamlined and ultimately save you a lot of time. Furthermore, you’ll be less vulnerable in the event of sick leave or if the payroll administrator leaves.
The mapping process:
- Go through your current procedures, processes and documentation
- Establish which systems are located in the payroll department and out in the organisation
- Identify the challenges in the payroll process
- Identify the opportunities to improve the payroll process
- Identify your employees’ expertise
Control your costs
One of the costliest components of running a business is payroll. Keeping these costs under control can be challenging while ensuring that employees are always paid on time, but there are several strategies to save payroll processing costs. Over time, business owners that manage their payroll more efficiently save a lot of money. Analyse costs per person and department as a starting point to find places where expenditures are not evenly allocated.
To figure out how much you’re spending on each hour worked, keep an accurate spreadsheet of all payroll expenses, including benefits and bonuses for each employee.
Use the information gathered during your cost analysis to devise a strategy for reducing future payroll processing fees while maintaining productivity among employees striving to meet deadlines. Also, understand what you’re paying for and how much each transaction costs in your payroll processing system.
Streamlining the process of getting data
It is easier for everyone to take action and make improvements if they have access to all of their data. If you use spreadsheets, create a master copy you can share with your team. They’ll be able to add new data and change existing data without having to update several files or send emails back and forth.
Create standard operating procedures (SOPs) for how often you review files with employees, undertake pay rate audits, and perform other payroll tasks so that everyone understands their roles at each stage of the process. Choose an automated data gathering solution to streamline your payroll and minimise mistakes that can occur with manual processing or spreadsheets. You can track and update things like hours worked, pay rates based on job titles or experience levels, raises for long-serving employees, and more with the correct payroll data.
Find out what other departments actually need
One of the most common mistakes businesses makes when trying to optimise their payroll process is failing to involve other departments, particularly accounting. You can never expect your payroll process to go smoothly if your business departments don’t have access to what they need at any given time. Determine what other departments require and make it a priority to provide them with the information they require as soon as possible.
There’s no need to generate an accounting journal entry if you have a simple business model where your accounts department merely needs to know the total number of hours each person has worked. If payroll managers must complete any payroll entries to submit your company’s financial statements and taxes correctly, ensure they are done in accounting.
Manage automatic payroll enrolment more efficiently
Employees must be enrolled in payroll software for their paychecks to be delivered on time and in the correct amount. However, when firms have many employees to enrol on payroll, the process can take several hours. With so many people involved, this wasteful use of vital firm resources offers a significant danger of human error. Instead, companies should automate the enrolling process to minimise avoidable mistakes and save resources.
Consider incorporating this into your automated onboarding system that can also enrol new employees in HR and other corporate services like benefits and payroll taxes. You should enable automatic modifications when an employee’s position changes, such as when they’re promoted or transferred between departments.
Payroll enrolment automation is a significant step in streamlining the entire process and making your paydays run more smoothly without using any other technology.
Embrace new business technologies
Embracing new business technologies is another excellent strategy to optimise your payroll process. You can automate a lot of work this way, making it easier for staff and department heads to manage many projects simultaneously. You can do so by utilising online solutions that enable you to quickly collect data while also automating payment processes like reporting and invoicing.
Consider the following possibilities:
a.) Use a time recording programme to automate your timekeeping or preload devices with employee timesheets that they may view independently. It’s a straightforward process with a solution like this because you don’t have to compute hours worked and timestamps manually.
b.) Invest in software that can help you prepare bills and send them out electronically, saving you time on administrative activities like billing clients and processing payroll.
c.) Use an online collaborative platform to let employees handle their own time off requests and expenditure reports. This platform will allow them to submit requests as needed and manage spending in real-time.
When making adjustments, submitting leave requests, or checking on spending, use automated notifications to keep everyone informed. When it comes to company technology, ensure you’re getting the most bang for your buck by teaching your employees how to use each tool. This guarantees that everyone is taking advantage of these systems to get the most out of them while spending less time inputting data or researching problems.
It should be simple to manage your payroll process
Your payroll procedure should be easier and more efficient if you follow these suggestions. You should be able to get your payroll done faster whether you outsource or do it in-house. Keep in mind that outsourcing does not imply that you are relinquishing responsibility for HR compliance or corporate culture. As a result, be sure the outsourcer is also capable of handling these challenges.
The advantages of a simplified process are apparent, as are the time and effort required to set it up and run. Do your due diligence to determine company needs and priorities. Only then will you be able to adopt the most efficient procedure and make the best of outsourced payroll services.
Consider using outsourced payroll services to manage the ins and out’s of your payroll process to help you have peace of mind. MASA’s payroll services have been empowering businesses for several years, and we have become an industry leader in our respective fields. You can contact us to learn more about our solutions and partner with a reputable payroll specialist.