Effective payroll management sits on a very tender spot between HR and finance, and as a result, it could be pretty complex.
If you’re looking to optimize your payroll management process, it is essential to implement best practices to ensure you are fully compliant and save time, money, and energy.
There are many payroll best practices that companies worldwide are implementing, and there is no reason you shouldn’t do the same.
Here are 11 best practices for effectively managing payroll that your organisation can implement starting now.
11 Payroll Best Practices Worth Implementing
Effective Payroll Management Tip #1 — Hire the right personnel
To ensure effective payroll management, it is of utmost importance that your business provides that the right people are in charge of the payroll process.
A fundamental trait required of every payroll professional is excellent attention to detail. Attention to detail eliminates possible errors in the payroll management process.
Effective Payroll Management Tip #2 — Train payroll officers and HR personnel
Payroll best practices are constantly changing worldwide. As a result, every employee directly involved in the payroll administration process must train and retrain appropriately to remain updated with the constant changes and best practices.
Effective Payroll Management Tip #3 — Develop and maintain an internal payroll procedure
Procedures and policies are the foundation of any suitable process, especially one as complex as payroll.
Creating and maintaining an internal policy related to payroll administration is imperative to serve as a guide for everyone involved in the payroll administration process.
Also, it’s essential to ensure that your policies do not conflict with national labour laws and other laws and regulations that impact payroll management.
Effective Payroll Management Tip #4 — Maintain a realistic budget and cash flow for payroll
Every business needs to maintain a realistic budget and cash flow to ensure no hiccups in the payroll administration process.
Thus, managing cash flow is a foundational building block for effective payroll management.
Effective Payroll Management Tip #5 — Prepare payroll early
Early preparation of your company’s payroll is vital to ensuring that there are no last-minute rushes that could result in payroll errors and miscalculations.
Thus, prepare your company’s payroll schedule ahead of when needed to avail you enough time to perform thorough checks and make necessary additions.
Effective Payroll Management Tip #6 — Maintain detailed records
Every employer must maintain detailed payroll records on each employee throughout the employment relationship. These records include documentation about wages, taxes, and other employment information.
There are several reasons to keep detailed payroll records. Although it may seem like hoarding reams of outdated forms and reports, there is a strong business case for record retention, some of which include compliance, smooth business, and legal defence, if need be.
Effective Payroll Management Tip #7 — Keep up with regulatory changes
One thing you’ll need to keep up with is payroll legislation, as things can change regularly.
Attending payroll seminars, watching webinars, and going to industry conferences can help to enhance your knowledge.
All employees in charge of payroll need to learn about the latest regulatory changes, industry trends, innovations around payroll, and more topics that will impact payroll processing.
Effective Payroll Management Tip #8 — Treat data security as a top priority
Confidentiality is a top priority when managing payroll. While trust is vital in working with employees and vendors, definitive measures must be in place.
They must be absolute to ensure that employee personal information and payroll-related data remain confidential and secure at all times.
Effective Payroll Management Tip #9 — Use tech solutions for accurate payroll data
Processing your payroll right can be challenging since several factors need to be considered, such as ensuring an accurate payroll.
However, you must make sure your payments and calculations are correct if you don’t want to have any issues with your employees. A significant way to achieve this is by adopting the use of technology and available relevant software.
Effective Payroll Management Tip #10 — Conduct regular audits for data integrity
Payroll audits verify that your business is paying employees accurately, timely, and in compliance with the law. Payroll audits are two-pronged.
The first step is ensuring your payroll records are accurate, prompt, and complete. Then, after making any corrections to any errors uncovered in the first part, it’s time to identify faults in procedures called internal controls that have led or could lead to inaccuracies.
Business owners should conduct payroll audits at least once a year to determine and remedy problems in their payroll systems. These business owners can perform the audit internally or choose to outsource the audit to an external firm.
Effective Payroll Management Tip #11 — Outsource activities that are costly to maintain
Outsourcing payroll activities can reduce company costs, which is one of its main advantages.
Professional payroll outsourcing companies have trained professionals, relevant software, and skilled management, mainly devoted to doing the one work: payroll management.
Another significant benefit associated with outsourcing payroll activities is time optimization.
Payroll plays a critical role in ensuring that businesses stay out of compliance troubles while boosting employee productivity — when done right. Thus, your business must commit to running payroll effectively to join the ranks of leading organisations.
Do you have payroll concerns, or are you looking to deploy global payroll interventions for your cross-border teams? Then schedule a consultation today. Let’s help you succeed.
