Payroll is a complex discipline, with many tax and insurance laws, 401(k) details, reporting requirements, and many other issues to understand and worry about. So here are 5 ways to improve your payroll process and make it more efficient.
1. Be Clear And Upfront About Your Policies
You’d be surprised at how much you can improve your payroll efficiency just by being clear and upfront about your policies with company employees. Unclear or opaque policies lead to misunderstandings, which leads to delays in payroll.
Your payroll policy should include:
a high-level overview of the payroll process
information on employee classification
information on salaries, expenses, and overtime
the procedure for rectifying payroll errors
Put this information down in writing and make sure it’s easily accessible. Also, make sure to avoid complex jargon wherever possible. The more straightforward your payroll policies are, the simpler they’ll be to understand and execute (and the easier your life will be).
2. Involve Your Staff
Some employees may have payroll issues that you won’t know about unless you make them feel comfortable enough to speak freely. By periodically asking your employees what they struggle with when it comes to payroll, you can nip the issues in the bud. And ask staff for their ideas on how to improve the process. Payroll affects everyone, and you’ll be surprised on how much information the staff will share.
Staff can also do more to make the payroll process easier. You can easily hand over some aspects of payroll management—expensing, overtime, and vacation leave, for instance—to employees. Your staff probably submits overtime sheets, vacation leave requests and expense reports anyway, so getting them to input the data directly into the system can save a lot of time and eliminate duplicate work.
Handing over these processes shouldn’t be too complex if you choose the right payroll system, either. Some payroll systems—Gusto, for instance—even have dedicated employee portals which grant your staff restricted access so they can input and update their personal details.
3. Set Up A Payroll Calendar
Streamlining data entry is only half the battle. Unless the data reaches you on time, it can derail even the best of payroll processes. This is where a payroll calendar comes in handy.
A payroll calendar is a visual reminder of the dates by which your staff need to submit critical information; and it’s invaluable for keeping everyone on track. As a plus, it’ll also let everyone know by when they should expect their paycheck.
Creating a payroll calendar shouldn’t be too difficult or time-consuming. Even an excel spreadsheet will do. Some payroll softwares, like Xero, let you do this natively inside the program.
4. Integrate Payroll With Your Other Systems
Because payroll depends on a lot of other business processes—taxes, accounting, attendance monitoring, and human resources, just to name a few—processing can leave you feeling like you’re spread all over the place. It can be tough (and incredibly time consuming), to gather all the information you need in one place.
This is where your payroll software integration comes in handy.
The best payroll software systems have powerful integration features available for your convenience. At the very least, look for a system that integrates with your accounting software and attendance monitoring equipment, so you can view all this information in one place.
And, if you want to take things to the next level, some systems also have an API (application programming interface) that’ll allow you to create your own custom integrations.
5. Audit Your Payroll System Regularly
Last but not least, don’t get complacent. A payroll audit should be a regular part of your workflow, not something you do only if you’re inundated with staff complaints.
Start with your payroll policies, looking out for any rules that might create confusion and simplifying them as much as possible. Your staff’s feedback will be invaluable in helping you identify particularly problematic areas. Revisit regularly to make sure you’ve addressed them effectively.
Next, review each step in your process to make sure it’s working smoothly. Ask yourself: is each and every step absolutely necessary? Or is there anything you could eliminate to make the process simpler and more efficient?
Finally, make sure your payroll software is working as it should; and test any integrations or add-ons for errors. Issues such as incorrect employee classification or tax information are relatively quick fixes, but you’d be surprised at how much grief they can cause you if left unchecked for a long period of time.
And, if you find that your payroll system isn’t adequately addressing your business needs, perhaps it’s time for a change.