How to Optimise your Payroll Process
This blog was updated on 5/09/22
Ensuring your staff is paid correctly and on time may seem like a simple task at first, but it’s easy for parts of this process to fall by the wayside.
You don’t want this to happen.
Fortunately, Skore’s software is built to optimise processes and help you as a business leader ensure all of your processes, including payroll, are running smoothly and correctly.
Let’s delve into why the payroll process should be a top optimisation priority for business owners.
Importance of Your Payroll Process
Never underestimate the importance of any process that is part of your business. And payroll should be chief amongst them.
Any disruption to your payroll process directly affects your employee’s morale and can create trust issues. These trust issues can eventually turn into quick employee turnover, and if you keep going as you are without fixing it, those turnover rates will just keep increasing. And that can get very expensive and costly for any organisation.
It is vital that your payroll process is as accurate as possible.
It also affects your reputation as a company, as word will get around if you have issues with your payroll process. And of course, you want to be sure you are compliant with regulations. A badly managed payroll process can lead to trouble in this area too, and to greater costs down the line.
Not knowing your own finances and slowly bleeding out employees are some of the worst positions you can be in as a company. Both of these are directly related to the payroll process. A poor payroll process directly affects employee morale and interest in investing their time in their work.
To keep your employees and yourself happy, you need to have a great process in place. This process should automate the more monotonous tasks to reduce duplication of labour, and you as a business should be constantly optimising and bettering it.
Still not convinced?
Here are some examples of tricky payroll situations and tips to help you manage them.
Payroll Process Tips
Not all payroll processes are the same, nor are they always going to be straightforward. We’ve compiled some specific situations you may come across as a business owner, with suggestions for how to overcome them to have the best payroll process possible.
Payroll Process Ownership
This is often different from organisation to organisation, but you want to know the answers to two questions:
Who is responsible for payroll approval and how often do they need to give it?
In some organisations it is HR, in others it may be the Finance department. But you just need to be sure that it is assigned to a specific title and thus to a specific individual. And that there is a clear chain of command should that individual be unavailable when payday rolls around.
Understanding the roles and responsibilities associated with your payroll process is absolutely vital for your success. So is understanding how the approval process works and ensuring that the system you are utilising automates certain parts of it such as tax calculations to optimise and reduce mistakes.
You also want to check that the system you are using is capable of recording its history of payments and pending payments should you ever need to check. Also, more than one person should be capable of using and understanding it. The last thing you want is to rely on an outdated system that only one person knows how to use – leaner software that is built to be understood by anyone exists.
Infrequent Changes to Payroll
Payroll will go through changes that may happen only once a year.
It can be anything from a pay increase to changes in working hours or taking time off for holidays. But as the one in charge of paying everyone, you need to know how to make note of this in your system for both yourself and your employees.
A lot of the time, line managers will forget to notify the HR department of these types of situations as they are so unique. Even if the employee stresses it to their manager and takes the time off and the manager covers the time, it might not make it all the way to the department managing the payroll process.
A great way to overcome this kind of situation is to make it a part of the existing process to note such an eventuality. Either by automating it or by creating a space for managers to fill in at the end of the month for the HR department.
Just ensure it is always noted as part of the overall payroll process to take these infrequent changes into account.
Temporary Changes to Payroll
We went over infrequent changes above, but what about temporary changes to payroll?
Leave – sick or maternity leave -, overtime and bonuses are all part of payroll that happen a lot faster and are more temporary. This makes them a prime area for mistakes.
For example, when someone is on maternity leave, you have to pay them and the person covering for them. You also want to ensure their benefits are not affected in any way. Any error here could lead to costly legal repercussions.
Similarly, someone taking sick or bereavement leave should not have to come back to work and begin a discussion with payroll services if something has gone wrong.
A solution a lot of businesses and organisations use to track these temporary changes are spreadsheets.
As you can imagine, this is not ideal.
After all, different spreadsheets can get sent to different departments and information inputted incorrectly or missed altogether. Asking your HR department to parse through all of this information when it is closer to payday will undoubtedly lead to errors and disgruntled employees, which can result in a downward spiral that leads you to high turnover rates.
Not to mention this is sensitive information that may be shared with more people than necessary.
Instead, make sure you are using an automated system that allows you to make changes really quickly and easily to accommodate these fluctuations in your payroll. Look at who sends what and identify where you could change this step to ensure a smoother process.
A great way to analyse how your current payroll process is doing beyond employee happiness is by mapping it out.
Non-Employee Payments
As a business owner, you will come across payments that need to be made and noted that are not related to your employees.
Whether that is a third-party or taxes, these payments will also need to be made and included in your pay slips and your own records. Not only to ensure these are made correctly and on time, but also so that you can keep track of all outgoing payments..
By mapping out this part of the payroll process as well, you know that you want to choose a system that can upload this kind of data for you and that it can work with it. This way you save time and avoid costly mistakes.
Mapping Out Your Payroll Process
We’ve discussed the importance of mapping out your payroll process in the previous section, but how do you actually get started with doing so?
At Skore we believe that helping companies figure out how to optimise and improve their processes is ultimately a win for us all, and so we are happy to provide a free template library for some all-important processes for businesses. We like to provide you with an idea of how we can help you out.
Our payroll process template, which as all of our templates utilizes Universal Process Notation (UPN), is easy to use and understand for anyone. You do not need to be a business analyst to follow along.
You can see there are two trigger points: the mid-point of the current period with contracted salary information as it is payment time and any contractual changes that may have taken place since the last time. They then go into two different steps with the specific title in charge highlighted below, and they both have the option to attach information – for example, proof of the change in contract.
While it might be easy to compound all of this information in one step, aspects of it may be lost in the long run as people change positions and seek to do things faster but not more efficiently. Mapping it out in this way ensures that no step is forgotten about and costly mistakes are avoided. The Skore template allows you to add all the information you need to your map easily. You can also drill down to more detail if you need to whilst keeping a high-level overview of the process.
Both boxes have the same output of ensuring the payroll information for the current period is up to date before heading into the next step of processing payroll. This also has two outputs, one being employees getting paid. The other is creating the all-important reports so that your internal financial information is up to date, your third parties are getting paid, and your taxes are also paid.
No stone goes unturned in the way this process is mapped out. Whoever is in charge, whether they be Payroll or Finance Administrators, HR, or yourself checking in later, can simply follow along with the process to make sure every step is being followed carefully.
Our template also allows you to assign each step of the process to a role in the organisation. This means you will always know at a glance who is responsible for what. You can quickly pull up a report showing the roles and responsibilities at every step of the way.
When looking for ways to improve, having such a map is incredibly useful to find places where things are slowed down for any reason – manual reporting as opposed to automated, or a system being used that doesn’t work with your needs.
Mapping out your payroll process and knowing what is happening, when, and who is doing it, is an incredibly important component of a successful business, and one that should be taken seriously when looking to improve processes.
Conclusion
Having an established and streamlined payroll process should never be a difficulty to overcome for a business, but something that falls into place if well-planned out.
It is an extremely important component for the success of any organisation, but one that can become a headache if not handled properly.
To avoid this happening to you, Skore is glad to provide you with a great starting template to map out your payroll process.
Get in touch if you want to find out more about how we can help.