7 Best Practice Tips to Streamline Processes, Avoid Errors
Payroll is often the largest expense for a business and can be even more costly because of low-performing teams and inefficient processes. A missed deadline or incorrect tax filing can result in fines or even jail time. To avoid these issues, let’s take a look at seven best practices that will help alleviate unwanted stress, optimize efficiency, and improve performance.
1. Keep processes simple. We all know that payroll is indisputably complicated, but your processes don’t have to be. Having a consistent and simple way of performing tasks creates a more efficient workflow and fewer errors. One way to make your payroll process simple is to consolidate multiple pay frequencies or pay schedules. What exactly does this mean? It means you pay all of your employees on the same day and at the same frequency. Doing so drives economies of scale, eliminates duplication of efforts, makes things easier to manage, and reduces processing time. However, keep in mind that some states do mandate how and when you pay hourly vs. salaried or industry-specific employees, so do some research before you make this move.
Outsourcing when it makes sense to do so is another way to simplify processes and be more efficient. Garnishment, tax, and wage payment processing is constantly changing, and regulations are increasing in complexity. Outsourcing these services to a third party eliminates you having to perform the time-consuming tasks associated with these processes. Let the vendors and experts do the work for you.
2. Automate your workflows. Move away from manual input or data entry. Manually keying anything into a system nowadays is an outdated practice. It is also time-consuming and prone to human error. Implement an automated workflow system where it makes sense to do so. Processes that are repetitive, time and resource intensive, and subject to human error should be the first to be reviewed for automation. Payroll requests such as bonuses and missing pay can be initiated, approved, tracked, and stored in a workflow system that can interface with your payroll system. Review your processing manuals and make a flowchart of your processes first. Then, successfully test each process, including approval points, before going live. Remember that a bad or broken automated process just makes bad things happen faster. So test, test, test!
3. Go paperless. Save trees and protect the environment by pushing for electronic pay and electronic pay statements at the same time. Paper checks can be a serious pain. They are expensive to print and replace, difficult to track, and can be a fraud nightmare. The alternative to paying by paper check is electronic pay. It is a much faster pay method, more convenient, and safer than cutting checks.
Printing pay statements is also costly, even more so if they are mailed to each employee’s home address. It’s such a waste—literally, because these statements usually end up in the trash or shredder.
A paperless payroll truly does offer a more streamlined, faster, and safer way of getting pay and pay details to employees. However, before adopting a paperless payroll, make sure that you are compliant with state laws and regulations. If your company has employees in multiple states, you must comply with each state’s requirements. Do your homework first. Once you have your employees on electronic pay and receiving electronic pay statements, you’ll no longer have to worry about lost checks, escheating unclaimed wages, stop payment fees, and postage costs. Employees will have same-day access to their earnings and can avoid trips to the bank to cash their checks. Both initiatives will boost efficiency and reduce costs.
4. Keep pace with emerging technology. Technology is moving and changing at the speed of lightning and can be a bit overwhelming. However, it is important to keep pace. So, what’s trending? Human capital management (HCM) solutions are the hot topic right now. An HCM solution is a cloud-based software program designed to help organizations manage their HR, payroll, and talent needs. All aspects of employee needs are packaged into a single platform. Implementing such a solution can improve speed and accuracy and ease compliance worries. Employers that invest in HCM technology are not only lifting the administrative burden off HR/payroll but creating a more strategic approach to HCM.
In today’s world, self-service is another function that will be trending for quite some time. People are in a hurry and truly do like the convenience of self-service. There is self-service everything, from self-service checkout in grocery stores to self-service check-in at airports and hotels. HCM technology coupled with mobile solutions enables employers to provide quick, on-the-go employee access to self-service applications at the employee’s convenience. Providing employees with access to view and print online statements, change personal information, and enroll in benefits allows companies to reduce HR/payroll administrative burdens and redirect or even eliminate resources, thus adding more cost savings to the bottom line. Implementing self-service empowers employees, giving them a sense of control knowing that they have 24/7 access to view or change their own personal data. Encourage employees to use self-service and help them get on board. You’ll be glad that you did.
5. Create controls, checklists, and audits. There’s nothing like having an error-free payroll. That’s what we all wish for, right? In order to ensure your payroll is error-free or to reduce your error rate, create a processing manual and checklist that includes testing of controls and audit points. Ensure there are separation of duties from start to finish. For example, if your Senior Payroll Processor performs most of the data maintenance or edits in your payroll system, he or she shouldn’t have access to finalize or confirm payroll and the supervisor should perform the review or audit. Using checklists, creating controls, and auditing payroll ensures an error-free payroll and consistent processes.
6. Keep up to date with legislative compliance. This can be a huge and difficult task, but it is a crucial part of the payroll process. You can’t let anything relating to compliance slip through the cracks, or you’ll risk facing severe fines and penalties. Review the list of APA compliance resources listed on the APA’s website at americanpayroll.org, under the “Compliance” tab.
7. Engage team members and invest in their growth. Teams are the way most companies get important work done. When you combine energy, knowledge, and skills of a motivated group of people, then you can accomplish anything. Foster collaboration among other departments such as HR and engage your team when it comes to special projects or system implementations. Include them on the front end so that they can provide input and suggestions early in the creation of processes. Ask for their feedback but remember to never discount their opinions or suggestions.
Invest in their growth. The members of your team will be more valuable to your organization, and to themselves, when they have opportunities to learn new skills. Provide them with the ongoing training (courses, books, presentations) they need to advance in their careers and to become knowledgeable about the latest technologies, legislation, regulations, and industry news. Make timely resolution a part of their overall training plan so that payroll requests are resolved and closed in a timely manner. Gaining education and being knowledgeable can inspire better productivity, quality, and engagement. The benefits are tremendous.
In conclusion, in order to optimize efficiency and performance and keep your payroll processes running smoothly, be sure to streamline and make things simple. Automate your workflows. Ditch the paper and go paperless. Don’t let new technology scare you or stall your decision to upgrade. Create controls, checklists, and audits and keep them updated as processes change. Keep up to date with legislative compliance. Last but definitely not least, always keep team members engaged. Encourage their growth and invest in it!
Tonya Kemp, CPP, is Director of Payroll Operations at Dave and Buster’s. She is a member of the APA’s Board of Contributing Writers for PAYTECH and the Strategic Payroll Leadership Task Force (SPLTF) Hospitality Industry Subcommittee.