Payroll is a core integral part of any organization. Ensuring timely reimbursements and salary credits can build trust among the company workforce and benefit the company in the long term. As a result, companies will either employ a separate team to process the payroll or integrate the function into internal finance or HR teams. As payroll plays a crucial role internally, owners and company management must ensure the efficient functioning of the payroll function in the company.
Payroll involves many functions, including salary processing, reimbursing expenses for various company activities such as travel, food and accommodation as per company policies, and ensuring final settlement of the exiting employees and other things. There are also many challenges faced by the payroll team, which companies should take note of.
Costs can be a significant blockade for implementing an independent payroll in many medium and small businesses. It involves acquiring an effective payroll system and implementing it with qualified staff making a considerable investment. Additionally, the company should ensure that the maintenance costs for the system remain low and future upgrades are affordable.
Company payroll data is very private data that needs to be secured and protected at all times. Any leakage of the payroll data can result in adverse effects on any business. Manual payroll carries the risk of data mishandling which causes several issues to the company. Payroll software should come with all necessary web security and theft protection to secure confidential data. Therefore, it is essential to put strict internal controls in place. It is also vital that the company employs strict internal controls on the whole system of payroll processing.
Adherence to Compliance
Companies operating in a particular jurisdiction should adhere to all the applicable laws, rules and regulations of the land. Failing to comply with these rules can invite many penalties and legal actions in some instances. In addition, following good practices can increase the reputation and trust of the company among its peers. Therefore, the payroll team should also monitor any changes in legislation constantly and ensure all payroll processes implemented in the organization comply with the changes. Additionally, the payroll process must adhere to the industry’s various requirements, such as generating employee equity and council reports, among other things.
The company payroll team should ensure that tax calculations are accurate and deducted accordingly if applicable from the employee salaries. Tax rules of the country can be dynamic and may change every year. Therefore, the company teams should keep an eye on any changes in the taxation laws and implement the same in the payroll process. Incorrect tax calculations can result in penalties, interests and rework. Payroll Experts can provide insights on the latest changes in the taxation rules.
Data management and Reporting
In recent times, business leaders and managers depend upon real-time and accurate data to make informed decisions. This decision making enabled by a robust data analysis and reporting exercise. It is possible only with a robust data management system. The payroll records of companies, if out sync, can delay in processing delays of promotions, bonuses, termination and final settlements. Manual payroll process without necessary controls means the available data may be incomplete, inaccurate, and outdated data to carry out an analysis. Hence the standardization and centralization are crucial for data analysis and reporting. Software payroll systems, to an extent, provide solutions for effective data management and reporting. However, analyzing the data to make sound decisions may require expertise.
Technology and Automation
The recent emergence of cloud-based payroll software and subsequent rapid adoption rate among large and small firms have resulted in a new type of system integrations, consolidations, migrations, updates and replacements. The new technologies offer better user experiences, quicker deployments, and reduce ownership costs. The latest technologies are instrumental in achieving company objectives of accurate and effective data management. The automation processes can help in keeping the data up to date and assist in data analysis. However, the technologies without required expertise and training can pose a host of challenging questions to the company. Outsourcing the Payroll Functions can eliminate most of the payroll worries of the company.
How can we make a Difference?
Jaxa Chartered Accountants are one of the experienced accounting companies in the UAE. We assist our clientele with their payroll process using the latest software with required security, ensure adherence to all rules related to tax, and provide data analysis with relevant insights to the company’s management. Please Contact Us for all queries regarding the best payroll practices followed in the industry. We’d be delighted to assist!