2013-12-11

Whether you have 15 employees in your company or 1500, it is always better to use an automated payroll management system instead of calculating payroll manually. An automated online payroll solution allows you to keep yourself free from the burden of legal and regulatory responsibilities as an employer. A good payroll management system not only takes away your legal and regulatory responsibilities but also saves approximately 35% of HR department’s time that goes in manual payroll calculation.

Some of the best practices to manage payroll system in your company are:

Classify your employees: There may have different types of employees working in your organization. Some employees may be permanent, some contractual, and some daily waged. You must clearly classify the employees of your company. Wrong classification of employees may result in wrong calculation of tax exemptions and violations of Labor Standards Act.

The best practice is to have a clearly defined policy for the payroll calculation of each type of employee. In addition, the payroll management system that you use in your company should be capable of handling payroll for all kinds of employees in your company.

Use an integrated payroll system: A payroll system that integrates various business processes such as: time and attendance system, human resource management system, leave management, tax reporting, and employee exit process is capable of maximum ROI (Return of Investment) as compared to a system that only calculates payroll.

Verify correct data transfer from integrated applications: If your payroll management system is integrated with other systems, ensure that all the data connections are transferring data correctly to the payroll management system. If you are processing payroll manually, double check all your paperwork and processes to ensure that everything is functioning properly.

Audit your processes regularly: All the processes of your company including manual and automated, must be audited at least once a year. Sometimes even automated systems can produce errors. If the errors are not caught in time, they may result in overpaying or underpaying employees. In case of mismanagement of exited employees, you may end up paying full salaries to them instead of holding their salaries and performing their full and final payments calculations. In addition, the promotions or salary hikes may also not be provided in time as promised.

Prevent Time Theft: Some employees use unethical techniques to misuse their time in companies. You can stop this by using biometric machines in your company and then integrating the attendance data derived from biometric machines to the payroll system. Another option is to use an integrated attendance system that takes care of breaks taken by employees, in addition to In and Out time of employees in the company. The integrated system will automatically calculate working hours of employees and calculate the payroll accordingly.

The best practices to manage payroll management system is to avoid using manual payroll calculations and transferring your payroll to a specialized software system. Try EmpXtrack Payroll management system, which is a cloud based integrated application that provides a fully functional payroll processing. It is integrated with the Human Resource Information System (HRIS), Leave, Attendance, Loans and Advances and Employee Exit management systems.

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