Any company with employees would process at minimum a payroll for each month. Payroll elements usually contains both fixed (e.g. basic salary, housing) and variable pay elements (e.g. telecom, transport, meals, etc.). HR departments should be very careful while processing the payroll, ensure accuracy at the same time, local compliance. Payroll errors can cost dearly to any organization, e.g. loss of employee morale, lost reputation, issues with local compliance regulations are to name some of them.
We take a quick look at some of the common errors and the implications of payroll processing errors:
- Loss of time: It takes long time to find the mistakes and correct the value. Each and every entry should be checked to find the mismatch value and lot of calculation needs to be included.
- Misclassifying workers: Because of the growing number of employees, consultants and other independent contractors, it is essential that you properly determine the classification of everyone working for your company so you can generate proper reports and adhere to local compliance regulations.
- Miscalculating overtime pay: There are guidelines and policies that must be followed when determining overtime pay and miscalculations can be costly, as employees work hard for that pay, this will result in loss of employee morale.
- Not maintaining confidentiality: Payroll information should not be disclosed to anyone outside of the payroll department or the senior management team. It is important that such confidentiality be maintained, it is difficult to maintain manual payroll sheets and secure them, if a single file is slipped somewhere, it is not supposed to be, it is available to all to see, it is advisable to use a payroll system instead, to secure access appropriately.
- Loss of trust: Employees may lose trust in the organization, if they repeated have to request corrections in their pay, some may even decide to leave the company in frustration.
Usually the root cause of majority of payroll errors, is incorrect data, if you are still doing your payroll manually, it is even difficult to spot errors, as many payroll managers, simply copy paste the previous months data, there is a very real possibility, you may incorrectly pay someone based on previous months information. It is always better to use an automated system to manage your HR and Payroll needs.
With HR Chronicle, we can assure you the system is smart enough, to make the process a breeze and the system will alert you at various stages when trying to key in incorrect or irrelevant data, with proper checks and balances, already built in to the system, you can be assured, of an accurate and compliant payroll processing experience.
HR Chronicle is a leading Cloud Based HR and Payroll Software, we have served our customers since 2006 that’s when the very first version of HR Chronicle came out, HR Chronicle is available in 2 flavors, Cloud Based and On Premise. To know more give us a shout, we will happy to discuss more.