How To Identify and Overcome Challenges of Payroll Processing

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How To Identify and Overcome Challenges of
Payroll Processing
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There are two aspects that a business keeps in
mind while coming into conception, paying right
and earning right. Both of them are linked to
each other and it is important to maintain
balance your business health. However, most of
the companies have their focus bent towards
earning and do everything possible in their right
to make sure it happens efficiently. Payroll
processing is a complicated task and requires
continuous surveillance and audit to ensure
efficient flow. But many businesses face
challenges in doing so which may
include ComplianceIf a business is running in
multiple locations, then ensuring a standard
payroll process with respect to the local and
federal compliance bodies becomes a challenge.
Good Corporate Governance has become a mandate
now and not meeting the regulations can come at a
high cost for the organization. An ideal payroll
process is formulated keeping in mind the
industry standards and employee
requirements. AccuracyMaintaining the accuracy
of payroll process is another challenge quite
abundant in large organizations. Generally,
payroll process works in batches in which
updations happen on either weekly or monthly
basis. In case of forward looking scenarios like
promotions, incentives and hikes, keeping track
of payroll process accurately may become
difficult. Other miscellaneous expenses by the
employees during the month require manual
inclusions which may lead to error in payroll
processing.
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Cost ImplicationsTo manage payroll process
efficiently, many organizations switch to
automation tools or online platforms. These are
usually expensive and may require a dedicated
employee to work on and manage them. Another
challenge with automation tools is the handling
of exceptions. When it comes to including manual
exceptions like exception against leaves,
compensations for overtime, etc., the employee
handling the tool may forget to do so. Due to
this the time spent to correct these errors may
result in expense in the form of
man-days. ConfidentialityPayroll process is an
internal process and is confidential for the
organization. The payroll data defines the
workflow and can reveal the capital
infrastructure of your employee base too. In an
industry that relies on big data, such
confidential documents are prone to leaks which
may cause serious harm to your organization. Taxat
ion ComplianceTax rules are dynamic. They change
over time and are varied for different countries
and, at times states too. The inclusion of these
tax changes is not easy when it comes to payroll
processing. Many times, over deduction of taxes
lead to law suits from the employees and lesser
deduction lead to loss for the organization.
Retrieving these negligible amount becomes
another time taking task for the finance and
accounts team. These miscalculations and failure
to compliance may also lead to exceptions in the
payroll cycle. As it is mandatory for all
organizations to withhold Income Tax for their
employees.
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Burden On Finance DepartmentThe finance
department in any organization has to take care
of both accounts payable and accounts receivable.
While large organizations may have large teams
with dedicated personnel to cater to each aspect
of the finances, small and medium sized
organizations do have the privilege to do that.
With the amount of finance tasks being less,
small and medium sized organizations assign these
tasks to any employee in the HR or accounts field
itself. In many organizations, the directors
themselves take care of such tasks. These
practices lead to several mistakes and
unnecessary iterations. Also, the analytical part
of these tasks fades away. How To Overcome
Payroll Process Challenges OutsourcingWith the
ascending age, a company should ensure growth in
every aspect of its working. The best way to do
that is to assign a separate department for every
field of work. But, in this case, outsourcing
comes as a boon. Many organizations are
outsourcing their finance and HR functions with
the primary motive of lack of regular
functioning. This brings along multiple benefits
for the organization as an outsourced service
provider provides dedicated focus and insights in
that particular field. Other benefits of
outsourcing are
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Less utilization of work space within the
organization Lower payroll process costs Improved
technological platform to ensure safety and
confidentiality Tax and regulatory
compliances Deeper insight of your finances
through regular analytics Lesser errors, reduced
turnover time and documentation Allocation of
payroll itself as an operating expense rather
than capital outlay Scalable Sustainable model
ensures not to incur additional capital
cost Standardization of process Drive Value adds
through SMART SOLUTION Implement Best practices
for End to End Process An outsourcing company
ensures better functioning as it hires expert in
the specific field of requirements only. It is
like having an entire organization working for
yours without the hassle of physical presence. By
outsourcing your payroll process, you not only
improve the streamline flow but also get expert
surveillance to prevent unwanted errors. For MNCs
working in multiple geographies, outsourcing
ensures standardization, centralization and
uniformity of payroll process across all branches.
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