4 Ways to Improve Payroll Processes


4 Ways to Improve Payroll Processes


Effective payroll processing is an essential business function. It also plays a pivotal role in keeping the level of employee satisfaction high.

Naturally, employees rely on a prompt and accurate payroll check. When the payroll process is delayed, susceptible to errors, or is overly complicated, it can be a thorn in the relationship between employees and leadership. On top of that, it can also cause unnecessary work and increased stress for HR.

Is there a better way to handle payroll activities which consume a large amount of time for the average HR department? We think so! To better manage time and minimize errors, here are four ways to improve your payroll processes:

1. Create a monthly payroll calendar and stick to it.

Because payroll is a comprehensive and recurring process, it’s crucial for businesses to develop a clearly defined calendar of deadlines and stick to it. Frequently moving deadlines forces payroll specialists to deal with stress and confusion, which in turn can easily result in errors. Who wants to field the call from the angry employee whose check was messed up…again?

To avoid this and ensure adequate time is available to get the job done, create a calendar that includes every step of the process, even the steps that occur outside of the payroll department, and live by it.

When creating your calendar, we recommend starting at the end, the net payment date, and working back to the first stage, the time submission cut-off date. Be sure to allow a realistic amount of time for each step of the process. Share the final schedule with all payroll stakeholders and relevant parties.

2. Conduct regular audits.

If your payroll department is susceptible to frequent employee complaints, that means it’s past time for an audit of the entire process. The best way to identify and tackle issues is through a comprehensive workflow analysis.

An effective audit should include checking to see that all processes are working smoothly, testing payroll software for proper integration and identifying whether or not employee time management is an issue tripping up the process.

3. Stay on top of payroll tax policies.

The IRS, as well as other government agencies, can be strict on enforcing payroll tax policies for small businesses. In addition to understanding your company’s role in compliance, it’s critical to stay up to date on changes in federal and state government policies.

It’s just as critical to stay on top of government deadlines, as well as current tax filing, record keeping and reporting requirements. One way to accomplish all of this is by assigning someone in the payroll or HR department to regularly research, compile and update this information. If that sounds daunting, it may be worth considering if it’s time to outsource.

4. Institute a transparent payroll policy.

Problems can occur when an employee misunderstands the payroll system. This is more likely to happen in a company where pay policies aren’t accessible for employees to reference. Most payroll issues or questions, like underpaid taxes or employee misclassifications, can be solved by establishing a transparent payroll policy and putting it in writing.

If your business needs to create a new policy or revisit an existing one, be sure to include how the payroll process works, how employees are classified, how salaries are determined, employee reporting requirements, company procedures for handling payroll mistakes and how promotions are calculated.

As a PEO, WorkSmart assumes responsibility for complete payroll administration through the co-employment relationship and can handle even the most complex payroll configuration. If you are tired of the payroll headaches and you think your business could benefit from more consistent payroll processes, get in touch with us and see if WorkSmart is a fit as your business partner!

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