What are some of the most common problems SMB's face doing payroll?
Answers
1 - Timely submittal of data needed to complete the process on your end;
Especially if you are doing direct deposit, you have to have the process completed by a certain point in time to make sure that the payroll values to employee bank accounts when it is supposed to - this is NOT an option, its a must; if you can't get this done every time, start looking for another job.
One more point on this....this problem is a bit of a catch 22, because it is difficult to motivate supervisors who are constantly late in submitting or approving time sheets to comply unless you can threaten them with not getting their people, or themselves, paid.
Unfortunately, to follow through on that threat, you would need to perform two payroll processes...without the specific time info, you can't print or run an accurate check anyway....so, inevitably, the time you take in processing payroll (two days in our case) is usually stressful, because you are relying on many other pieces coming together and it involves people that are not always reliable.
By the way, outsourcing payroll does NOT solve this problem......you still have to send them a file to process, which means you still need the information, and it needs to timely, and it needs to be right......if anything, outsourced payroll services are far less flexible than you will be in handling late issues that will arise;
2 - Accuracy of the time sheets - you need to review them all, its amazing how many supervisors don't know the rules, or worse;
3 - There is always at least one thing in every payroll process that no one has seen before. After 28 years, I would have thought I had seen every single thing that could have happened in a payroll process, but there is always something that requires interpretation that has seemingly never happened before. If you have significant turnover in Finance, this will occur even more frequently, because it will be less likely that anyone is around to remember the history.
4 - Don't underestimate the importance of payroll and getting it right.....if you want a mutiny on your hands, watch how fast you can accomplish that by having a department with a reputation of getting payroll wrong, or in being sloppy....this is the single most important thing you do, in the eyes of the employees you serve...don't forget that, because they won't. Since you don't control all aspects of the process, you need key people in each department that you can get questions answered from quickly, and supervisors need to be well schooled on time sheet rules, wage and hour law, leave benefit usage, and penalties for falsifying a time sheet;
5 - Have multiple sets of eyes reviewing the payroll journal before its finalized......checking for accuracy. Make sure that the Payroll Journal makes sense, when compared to the prior pay period. Someone should be reviewing that and explaining all changes to net pay from the prior period. If anything doesn't look right, you dig deeper and find out why.....this is very important.
6 - If your system processes based on a default process, with exceptions being entered for anyone that isn't getting the normal hours, etc.....try to have the exceptions NOT related to hours prepared in the system ahead of time....you usually know what they are....raises, split pay, benefit changes, addition or deletion of a supplemental insurance product, etc....and since they aren't affected by the number of hours worked in most cases, you can get a little head start by having those completed already.
Sorry, I got rolling.....I hope some part of this is helpful, and not too elementary or too insulting...
1
Al - I understand mutiny - years ago when payroll and
Most line employees worked the same number of hours but because of rounding their checks were always 1 penny different (+/-), week to week.
They would drive me crazy for the penny.... and there was nothing I could do...but throw them out of my office... :)
I agree with the comments and will add the pain of making sure that paid time off/vacation is submitted. You do not want to get payroll wrong.
However given all of the moving parts I would go with an outsourced provider. There are online payroll providers such as Intuit that is very cost effective and they will make sure that your filings are done properly. This is even more important if you are multi state as you would have filings in multiple jurisdictions. Moreover you do not want to be late in submitting payroll taxes and taxes withheld as this creates its own issues with the government.
Best
Joan
I think that the biggest pain point is multi-state issues. If you are just big enough to have multiple locations or have employees traveling out of state, the rules get complicated and usually SMBs don't have the resources to research and comply with every state policy. Having an outsourced provider can sometimes help, but you have to make sure that they are willing to provide advise not just process the
Great comments above! In short, the main challenges are accuracy and timeliness while getting the entire company to work together. In my last company, we had written rules about submission of time sheets and approvals by managers so that the process went smoothly every-time. Before those rules, there was always at least one aggrieved manager running the halls to get his employees to submit their time. Not the best way to spend Friday evening!
1
I remember this question being answered by an HR pro I know, make sure your payroll practices (including not paying an employee for failure to submit timesheets) meets both Federal, State and Local laws.
The pendulum has swung so far towards the employee, that employers are dammed if they do or they don't.
Case in point. Company policy is no overtime. Employee comes in early and stays late. You as the employer MUST pay overtime, regardless of company policy. The only way you can stop it is to physically bar employees from office or fire them....
Concur with comments and suggest QA the one-off payments with one-over-one approval authority (once a manager submitted "forecasted" commission spreadsheet versus actual); i am going to be redundant and emphasize accuracy / timeliness as you don't want DOL knocking on your door; lastly since outsourcers provide the compliance and processing expertise while the company is still on the hook for hours reported in the correct categories, try to budget the programming/IT investment in building a direct feed to payroll system.
It was touched, but I am not sure fully fleshed out. If you are managing a Sales Force, the largest pain point is out of cycle checks, related to Commissions earned. You will always have some "line in the sand" policy that states "if you do not submit changes by this date, you must wait until next month to be paid"...but there will always be an exception. Don't run from building the exception process upfront.
Filed Under:
Technology