Payroll is a very important part of any business, whether it is an internal department or an external service. Employees expect to be paid timely and correctly. While it shouldn’t be the main reason, getting paid is a large part of the reason people go to work every day.
Businesses need employees to be paid correctly not only to keep the employees but also to ensure they are not losing any unnecessary money. In order to provide these correct payments, payroll departments need to follow payroll best practices. These will keep everyone on the same path with the same expectations.
Consider Outsourcing
In a world full of specialists, there is no reason to struggle in an area that you are not skilled in. Often, outsourcing to a third party payroll service is the most beneficial thing a company can do. External payroll services are already established in their rules, dates, processes, and more, so it takes that pressure off you. It can also be much more cost effective than having a full-fledged internal payroll department.
Establish and Enforce Rules- Set Expectations
If you choose to outsource, you merely pass the payroll service’s rules and regulations along to your employees. However, if you are keeping it in-house you must set your own. There need to be clear-cut pay periods, for instance, Saturday to Friday.
Employees need to be clear on the fact that any time not turned in by the end of that period must go on the next pay period’s check. Sadly, if you break the rules for one employee, you will have to do so for others. That will lead to a big, confusing mess. Everyone needs to know what the rules are, and they need to be followed consistently.
Choose the Best Tech for Your Payroll Needs
There are many payroll technology options available and it is important to choose a good one. Some of the best ones automate most of the payroll work, meaning less work for the payroll department. Automating systems can also prevent illegal payroll practices. For instance, giving each employee a card for clocking in can prevent them from having their friends clock them in. Having the hours automatically inputted and calculated in a system prevents any fraud on the part of the payroll department.
Also, consider payroll technology that includes analytics and provides desired reports. This information can assist in determining which employees might deserve a raise or a promotion. Generally, though, those reports can be used for a wide array of tasks and decisions.
Move Toward One Delivery Method
Though it may seem strange in this day and time, not everyone has a bank account, or a PayPal account, for that matter. Yet it is much simpler when a company can provide all payments through one payment type. For instance, if all employees did have PayPal accounts, the company could simply disburse checks into those accounts. This would prevent the difficulty of having to separate payment methods.
Even if some of your employees do not have accounts, there are still ways to simplify payments. Many companies offer prepaid debit cards to their employees who do not have their own debit cards. This can be a frustration for some employees, though, as there are fees associated with using that card. It might be more favorable to try a couple of other approaches.
For instance, Regions bank offers a prepaid bank card that has very few fees associated with it. In fact, there is usually no more than one small monthly fee. Perhaps suggesting this as an option or offering some type of benefit for opening either a bank account or a PayPal account would encourage most employees to do so. The bottom line is to do your best to move toward only one payment method to simplify payroll.
Spread Jobs Among Payroll Employees
Staring at numbers all day can be a bit tiring, even when you love them. Being tired is not helpful when you oversee very important information and processes, such as paying employees. However, companies can help their payroll department from making some costly mistakes by spreading out the workload.
Do not expect just one person to handle the payroll for hundreds of employees alone and not make mistakes. Instead, keep at least two or three managers for every couple hundred employees. Has one focus on entering the hours worked, one double checking those numbers, and one making the payroll payments? And again, the more you can automate, the fewer mistakes you will find occurring.
By implementing these best payroll practices companies are providing clear rules and expectations, which everyone can benefit from. The five payroll best practices mentioned here can make a very large difference in any payroll department and company. There are, however, some decisions to make and some rules to set.
To be effective, meet with leading members of your payroll department and other management members. Determine whether you should hire an external service for all or any part of payroll and set the necessary rules and guidelines that will fit everyone’s needs.
