Five Payroll Nightmares and How to Solve Them
01 November 2019
People are counting down the days to payday, making plans for when the money hits their account. But they don’t see the trials that go on behind the scenes to make the magic happen. There are many payroll pitfalls to avoid.
Do you struggle to get a response from zombie payroll systems? Is precious data oozing through cracks in your processes? Do you dread the coming of each payroll, knowing it’s just a matter of time before disaster strikes?
This Halloween we share with you some quick and practical solutions to banish those payroll nightmares for good -
When overtime goes missing
Failing to pay people for their overtime could be a breach of their employment contract. This reflects badly on your organisation, and such errors can be a pain to fix. But spare a thought for the poor souls who don’t get the extra money they’re expecting in their payslip. They’ll feel angry. They’ll feel betrayed. And they’ll come knocking at your door.
What gremlins are behind this payroll nightmare? Using spreadsheets and paper forms to track time and attendance makes it much harder to get the right data to payroll before cut-off. You just can’t count on manual processes to keep overtime alive.
How to solve it
Automation is your salvation:
- Watch the clock - give employees online, mobile tools to clock-in and clock-out in real time
- Feed the machine - automatically feed their time and attendance data in to your people management systems
- Keep things together - integrate your organisation’s HR and payroll systems so data flows seamlessly between them
- Lock down the hours - share information with payroll more securely so data doesn’t get lost along the way
- See into another dimension - get more insight into how your workforce operates with live and accurate data
2. Losing track of your people
Do you really know who’s who in your organisation? There could be all sorts of people lurking about: full-timers, part-timers, contractors and apprentices to name just a few. And don’t forget those on parental or sick leave. If you misclassify their tax or National Insurance status, that could cause their payslip to be over or under what they’re due. It’ll also rattle the cage of HMRC when you send them the wrong information.
Why is tax and NI such a terror for payroll teams? Fixing mistakes can be time-consuming and costly. These can happen when incorrect information is passed to payroll, or when there’s a misunderstanding on how the law works. You need to make the right judgement the first time… or pay the price.
How to solve it
Be sure who comes through the door:
- Keep a close check - develop a clear process for classifying new hires and changing the status of current employees
- Is anybody hiding? – identify locally-hired contractors that might not be on your central HR system
- Log your evidence - make sure you can prove employee status to HMRC if called upon
- Escape rigid systems – use a flexible payroll system that can handle a range of employee and contract types without the need for workarounds
- Comply with the law - keep up to date on legislation so you’re always prepared for tax code changes
3. The costly consequences of archaic systems
Be afraid. Be very afraid. Failure to pay people on time can have serious consequences for your employees. They could struggle to meet their financial obligations and end up in debt, through no fault of their own. Will they ever trust you again? Or will the blow to their morale send them running, leaving your business looking like a ghost town?
Some say that time is a cruel master. But the real villain here is Frankenstein payroll systems. Forcing archaic, miss-matched systems from across your organisation to work together creates a beast that’s out of your control. It can slow you down to the point of payroll paralysis. Free yourself from its claws before it’s too late!
How to solve it
Escape the clutches of payroll paralysis:
- Don’t wait, automate – manually processing payroll in the witching hour makes mistakes more likely
- Beat the zombie count – lose the manual calculations that slow you down with software that does them for you
- Stick together – integrate your systems to escape the time warp of repetitive tasks
- Run in-flight checks – use payroll software with a built-in mechanism for spotting and removing errors
- Find a safe place – run your payroll from a central, secure and accurate data source to eliminate errors
4. The reality of falling foul on compliance
If the law changes, does your payroll system keep up? New legislation could affect many aspects of your payroll, from the information that appears on payslips, to tax and pension contributions and the minimum wage. Turn a blind eye and you not only risk paying people incorrectly. You expose your organisation to legal action, fines and other penalties.
This payroll nightmare is a PR disaster!
Pleading ignorance is no defence when you’re in the dock for payroll misdemeanours. The real excuse is a lack of responsibility, poor training and invisible processes. It’s time to reform the character of compliance in your organisation before disaster strikes.
How to solve it
Comply to survive:
- Have a team of legal eagles – make sure your organisation understands the importance of keeping compliant with the law through having a team to ensure your business is always acting lawfully
- Never stop learning – ongoing compliance training should always be on the agenda
- Audit your systems – check your systems regularly to ensure they’re in line with the law
- Time for an upgrade? – you might need to upgrade your systems manually to keep up with the latest legislation
- Plan well ahead – never risk leaving it to the last minute to plan for legislative changes
5. When bad data becomes more than an inconvenience
Payroll has more personally identifiable information in its hands than any other department in your organisation. If you don’t have all their details present and correct, people don’t get paid. This could be more than a payroll inconvenience that’s a hassle to fix. It’s a data protection nightmare waiting to happen: inaccurate and missing personal information could mean you’re in breach of the law.
The fact is that mortals can make mistakes. And poor processes and leaky systems exacerbate the problem. A single error can be duplicated, and data could be flying loose who knows where…all of this unnoticed until chaos hits you where it hurts. The thought alone is enough to keep you awake at night.
How to solve it
How to tame your data:
- Get it right first time – your onboarding process should have water-tight ways to collect employee data accurately and securely
- Never stop checking – run regular audits on any personal data you keep for payroll purposes
- Share the inputs - make it easy for people to update their own data safely through employee self-service
- Give data a good home – provide a master data source for faster access, better accuracy and tighter security
- Bolt the doors – protect personal data behind a force field that no wizard could break