7 Tips to Optimize Your Payroll Process

tips to optimise your payroll process

Payroll is an important process for any organization. Hence there should be no room for error in it. According to hrdrive.com, couple of such errors could be the reason for job hunting for 49% of employees. When you make mistakes in inputs or output, that could lead you to the salary over-paying or under-paying, excessive tax withholding, and breaking the company’s laws. Collectively all these lead to violation of laws and, most importantly, employees dissatisfaction. And this is why you need to optimize your process to avoid such incidents. These payroll tips & tricks will help your management to reduce the ordinary time-consuming process of calculating the salary.

If you search on the internet, there are numerous tools and techniques to optimize your payroll process, but you must be careful while choosing these because tools and techniques that work for any organization do not necessarily work for your businesses, it depends on the nature of the business as well as size of the business. So you must choose the correct tools and techniques that suit your organization’s needs. Our payroll automation tips can help you to select the right tools and techniques to optimize your payroll process.


Let’s go through each one-by-one:

1. Set a Payroll Budget

An organization has many functions and processes, and different budgets are set for different processes, the same way a budget should be set for the payroll process. Because it also has many functions and tools in it, a qualified person is required to operate and process it. To bear the expenses of that professional person and tools, a budget is needed.

Sometimes unplanned expenses on payroll can be expensive for an organization, which could eventually lead to a loss in the overall revenue of the organization. That is why a pre-planned budget should be there so that the expenses don’t exceed the limit and losses can be avoided.

2. Design a Clear Policy

An employee’s salary consists of many components such as their provident fund, allowances, professional tax, etc. there should be clarity in all of these policies like how and when it affects an employee’s salary because all of these component’s policies differ from each other and combinedly become the main policies of an organization.

If your policies are a bit confusing, then you can have problems in the future. Just imagine that your employees are having a hard time understanding all these policies, then designing it would be of no use. As the policies are the first thing a newly joined employee has to understand, as it reflects the workflow of the organization. That is why your policies should be clear and to the point. So that your employees can have a clear idea about policies.

3. Create a Payroll Calendar

Different classes of business, departments, employees categories, etc., have different payment schedules for salary. It can be weekly, bi-weekly, monthly, or something else. Such a diverse schedule depends on various factors that should be noted and followed by the organization. With all these different salary schedules, sometimes you can forget to make some payments on time, so to avoid this problem, You can create your own calendar according to these payment schedules.

Creating a calendar that shows the whole chart of your company’s pay periods helps you follow it regularly. Under this, you can:

  • Set up different frequencies according to various employment types, which shows how repeatedly your payout happens.
  • Enlist the holidays of the year so that you can exclude them priorly.
  • Enlist the data required to carry out the procedure.
  • Communicate with your employees and resolve any queries, if any.
  • Alarms are always there to wake you up and remind you that it’s time to pay employees.

Like this, you can set up your own customized calendar, which will remind you what to do at a particular time.


4. Check Compliance laws

Compliance for any organization is of utmost importance, any errors in following compliances can result in a penalty from the government, and sometimes this penalty can be so big that it can negatively affect your organization’s revenue, so make sure that you are being compliant because any organization cannot function for a long time without being compliant. By being compliant, the management tries to ensure employees that they are getting the benefits they deserve.

The government has made many schemes for employees, ensuring their social and medical security that an organization is inhibited from breaching. Complying with these laws also highlights the basic morals of an organization.

5. Automate your Payroll Process

The payroll process takes a lot of money and time when it is done manually. It is also easily prone to mistakes which can lead to more wastage of time and money. The best way to avoid that is by automating your process.

The automated payroll software enables you to track your employee’s time and performance and reward them for the same. It keeps the employees in touch with the company policies. It also helps to reduce the redundant time-consuming process of calculating the employees’ salary.

11 Payroll Tips

6. Distribute Duties Among Your HR Staff

The payroll process includes a bunch of activities like gathering employees inputs, calculating salary, disbursing employees salary, keeping up with compliance, etc., and sometimes it can be too much of a workload for an individual to handle, so it would be smart to distribute these duties among the HR staff so that your payroll process keeps running smoothly.

Separating tasks won’t only help in relieving stress from the individual, it will also help in meeting deadlines, increasing accuracy, and preventing mistakes.

7. Maintain Accounting Records

A company’s biggest function is to pay salaries to employees who contribute to the organization’s growth. Payroll is one of the biggest expenses for an organization. Hence it is essential to track and record it in the books of account. This will help the management to know how and where the expenses are made, leading to future decision makings. Preparing the accounting records also helps the management to track its cash flows to maintain its budget.

Current Trends Related To Payroll You Should Know

  • New Alight report finds 40% of companies will modernize payroll systems by 2024.
  • According to datagraphic, Approx. 70 – 80% of repetitive, rules-based tasks can be automated.
  • According to peoplesonic, Stats show that businesses have opted for automated payroll systems, which has resulted in 80% reduction in the payroll costs, overall.

To Wrap It Up…

The tips for managing payroll mentioned above are the most general and useful to every organization. Still, you can develop your own set of secret weapons to win the payroll procedure every month, as per your organization’s needs.

If you want to optimize and automate your payroll process, then try factoHR’s payroll software, it has features like a mobile app, statutory compliance, attendance and performance linked salary processing, payslip generation, and many more to optimize your payroll process.

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