How Businesses Can Lower the Risk of Making Payroll Mistakes

Last Updated: September 8, 2021

Geoffrey

Geoffrey

The payroll department in any company has a huge amount of responsibility. A mistake can cost the business heavily, learn how to avoid these mistakes.
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The payroll department in any company has a huge amount of responsibility. Their jobs are often quite complicated and require a lot of manual work. This manual work is ripe for human error and although many payroll employees are really good, no one is immune to mistakes. Nowadays, there are more and more solutions to these payroll issues. This article is about how businesses can lower the risk of making payroll mistakes. 

Use The Latest Software

Human error is the plague of a payroll department. It is so easy when entering numbers or doing calculations for someone to make a little mistake. Even the smaller mistake to someone’s pay can make a big difference and looks very unprofessional if you fail to pay your staff correctly. Using the latest software should help you minimize these risks. In recent years, there has been an explosion in cloud-based payroll software, allowing you to simply and integrate many different processes. If you are looking for ways to lower the risk of making payroll mistakes, using the latest software is a great place to start. 

Allow Staff Members To Update Their Details Themselves

In some circles, this is referred to as being a ‘self-service’ model of business. Giving the responsibility to the staff of maintaining their personal details so that this is taken out of the hands of HR and payroll can minimize mistakes. This is because it has to go through fewer people before it is entered. Also, if you are entering in your address or bank details, you are much more likely to get them right or to notice if you have typed them wrong. Allowing staff members to update their details by adopting a self-service model is a smart way to minimize the risk of making payroll mistakes. 

Make Your Policies Simple

One of the most difficult things that someone who works in payroll has to do is to calculate all the additional payments that occur every month. These are things like expenses, reimbursements, and overtime. The policies that are created to dictate how these repayments are calculated are often quite complex. You might think that they need to be that complicated, but often you can work out the same thing in a much simpler way. The easier these policies are to understand, then the fewer mistakes that are going to be made. By making your policies simple, you are lowering the risk of making payroll mistakes. 

Phase Out Physical Payslips

Although physical payslips are not inherently more prone to errors, there can be mistakes made in the process. Most companies are moving towards electronic payslips, and with good reason. They are so much easier to manage and store as they are just online. It is simpler for staff to receive them because they can just be emailed on payday (a process that can happen automatically). There is always the potential when giving out physical payslips that someone ends up being given the wrong slips. This is very embarrassing for the company and a privacy issue, as that staff member shouldn’t know what other people are being paid. Phasing out physical payslips is a good way to reduce the errors made by payroll. 

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Direct Deposit Salaries

Directing depositing salaries through a faster payments transfer system is much better than the old school ways of paying staff. This process is essentially the same as when you transfer money to any other person. The payments are quick and traceable and can be set up to happen automatically every month. This means that the base salary payment amount will remain fixed and will be less prone to error. Using direct deposit salaries is a great way to lower the risk of payroll mistakes. 

Have A Payroll Calendar

This is a good housekeeping policy that every company should adopt. Having a payroll calendar that is accessible by not only the payroll department but also by every staff member in the company is a smart thing to do. In terms of minimizing mistakes within payroll, it means that everyone who works there will know exactly when everything needs to happen. It also means that staff members won’t be able to be confused by when certain date cutoffs are. Having a payroll calendar helps in lowering the risk of payroll mistakes. 

Payroll for a large company can be a very complicated process. With a complicated process comes an increased risk of mistakes, no matter how good everyone is at their jobs. There are many ways to lower the risk of payroll mistakes, mostly these involve utilizing new technologies. Hopefully, this article has helped you lower the risk of your payroll mistakes.

Written by Geoffrey

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