Is Your Payroll Costing You More Than It Should?
Nov 29,2020 / Haroon Juma / Payroll Blogs
Payroll management can be complex.
Payroll operations in finance or HR are often separate from line management where decisions affecting employees are usually made. Unless these decisions are tracked and communicated, employee payroll will likely lead to an inaccurate payroll that could cost the business. For some organisations payroll errors cost upto 5% of total payroll.
If your business runs a manual payroll and employee records management process, our useful blog highlights the risks and issues that affect the bottom line.
There are numerous facets involved in running an accurate payroll. Hence processing a manual payroll can be a time-consuming and complex task. This includes management of employee allowances and deductions, end of service calculations and employee data such as handling sensitive employee related information such as banking or private details.
This makes manual payroll processing an error-prone activity and presents risks adversely affecting your organization.
Challenges – Manual Payroll Processing
Studies have shown companies experience higher payroll costs if they cannot track employee expenses and payments. Consequently, it is common for employees to receive more or less compensation than they expect.
Some typical issues under unstructured payroll processes include:
- Employee Documents: Maintaining paper or scan records for employee data required under the Legislation. It quite easy to overlook expired documentation when the valid dates are not tracked. In addition legal document renewals may be late, leading to penalties.
- Allowances and deductions: Ensuring that the employee allowances and deductions are accurately reflected in payroll. Compensating your employees for allowances and/or deductions for approved adjustments are miscommunicated and not in the employee payslip.
- Increased costs: Managing a manual payroll is time-consuming. It can strain HR and finance resources, reducing productivity and increasing costs for the business.
- Security concerns: Payroll data includes sensitive employee related information such as, bank details, privates address, national identification number, etc. Breach from any data leaks can lead to adverse effects. Maintaining payroll confidentiality via a manual process with hard copies doesn’t ensure the level of security required.
Automated & Outsourced Payroll Processing
Maintaining an accurate payroll while promoting efficiency and automating your payroll is a definite path to consider.
Benefits – Automated Payroll Processing
There are several benefits associated with automated payroll processing. A few key advantages include: –
- Accurate payroll processing: Automating your payroll means all payroll related calculations will be done automatically set to company policies. This ensures an accurate payroll, preventing any human errors from data-entry mistakes and miscalculations. Automated payroll will scheduled payroll, compensating your employees on time.
- Streamlining payroll deductions: Any type of deduction against to an employee is reflected in the payroll. HR automation software will deduct against an employee approved by the manager or HR admin directly. For example, loan installments automatically deduct from the employee salary without errors.
- Compensating allowances: HR automation software will apply all allowances in the employee payroll. For instance, a fixed allowance for monthly transport costs will be reflected each month. Non-recurring allowance such as air ticket will be reflected in the payslip on approval.
- Compliance requirements: UAE Ministry of Labor requires every organizations meets the minimum compliance requirement. HRM software enables you to pre-build policies, manage documents, auto-generate reports for evidence of payment and maintain a record of all employee related transactions.
- Safety and security: Payroll data includes sensitive employee related information. A HRM platform ensures security and safety measures, safe-guarding all employee related data.
- Reduced costs and increased efficiency: Automating your payroll and other related HR processes is time-efficient and reduces use of HR and finance resources. This increases productivity and reduces the business costs.
If your business wants to reduce costs in HR management to review constantly changing regulations and managing required HR documents and payroll processes, implementing a streamlined process and automation delivers substantial benefits.
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