Payroll management looks like a simple process from the outside but is one of the most difficult administrative functions of an organization. One mistake in the payroll process may cost a lot for companies, and one single small error can ruin the overall business operation.
A payroll system has a lot of specifications. It needs careful analysis not only of employees’ work hours but also of different labor and tax laws. If left unchecked, errors and miscalculations can cause trust and compliance issues, and worse, may even lead to legal action. That’s why it’s critical to understand the payroll management system complications so that a company can run it smoothly and efficiently.
An incident of receiving an incorrect paycheck twice in a row was posted by a restaurant employee online, asking what he needs to do after reporting the first miscalculated paycheck to the manager yet got another incorrect paycheck the second time. The issue was he worked overnight, but, on the first payroll, it was shorted fifteen hours and only paid with the regular rate for a week instead of the overnight premium. On the second incorrect payroll, the paycheck was missing ten hours and only paid for one week with the wrong rate.
While there is no such error-proof process, a company can improve its payroll system by identifying problematic areas. Here’s a quick rundown of different challenges that make payroll processing difficult.
WORK HOURS CALCULATION
Work hours arrangement and requirements vary in different companies and industries, making the time monitoring a lot trickier when it’s done manually. Tracking employees’ days off, working hours, and overtime, when the company grows beyond ten employees, can be time-consuming, especially if they work remotely from several locations. If everything is done manually, the collaboration between HR and payroll personnel may be less efficient. To streamline the operation, an efficient payroll system implementation with payroll, time in time off, and leave tracking.
DISORGANIZED AND LACKING DOCUMENTS
When you’re in charge of a large firm, you can’t avoid customizing thousands of things for your employees. Customization, on the other hand, can cause confusion, which can lead to payroll issues.
The easiest way to deal with this is to ensure that the documentation is complete and free of errors. The paperwork can be done manually by administrative staff in smaller businesses, but in larger businesses, it must be managed with technical assistance to ensure accuracy and efficiency.
TAXATION AND OTHER DEDUCTIONS
Another complicated area that the payroll team has to manage is the taxation laws and other government policies which differ depending on what country your company is in. The deductions and other calculations have to be processed and reflected in the payroll accordingly. The payroll team has to be on top of these laws to save payroll mistakes from happening and increase workflow efficiency.
Payroll errors are more difficult to correct because the corporation spends a certain amount of money on transaction processing. Pay rules should be handled with considerable caution and responsibility. Tying up the handling of payroll with a payroll management system that can help in managing payroll and human resource tasks easily and effectively.
EasyHR is a Software-as-a-service (SAAS) web application that allows real-time updating and monitoring of different payroll calculations including overtime, tardiness, and leaves. It is also integrated with an automatic DTR and payroll computation with Philippine Statutory and mandatory deductions. By using EasyHR, payroll errors can be reduced.