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How to Optimise your Payroll Process

18th May 2022
Brought to you by
SKORE_Logo_AWEB
Skore is the process improvement software that allows Accountants to map, analyse, improve and...
Share this content

Identifying the manual steps in your payroll process and optimizing them will lead to a more accurate, efficient service. We all know payroll is a key process in any business. Any disruption to it has a major impact on employee lives and leads to low morale and trust issues. Therefore, whether you do payroll yourself or outsource it, you need to get it right. This isn’t always as easy as you’d think, with different rules and regulations, different types of employment contracts and benefits to consider, there are many opportunities to make mistakes.

In this guide we examine some of the common errors made and give recommendations on how to review and improve your systems. Plus we provide a free payroll process template to help as a framework to identify the manual steps and improve issues in your process.

Infrequent Changes

Infrequent change may seem like a good thing but that’s only if you remember to make a note of it! Payroll starts with each employee’s contract, the hours they work, how much they are paid, how many holidays they get and the benefits they receive. These rarely change and generally do so at the same time every year following an annual review. As a result it's often up to individual Line Managers to remember, organise and then feedback changes to the HR department. Each of these steps add time and are prone to information being lost or entered incorrectly.

We recommend looking for systems that are integrated into the same HR and payroll system that remind Line managers to run reviews and enter changes immediately afterwards. This provides a joined-up approach between the line manager and HR as well as saving time on duplication.

Temporary Changes

This is perhaps the area most open to mistakes and requires frequent and time-consuming fixes. Temporary changes include things like overtime, bonuses, leave and other one-off changes that can impact an employee's salary. However, these changes are different every month and often rely on self-reporting. Furthermore, changes like these typically are reported manually or tracked using spreadsheets.

Look for any steps where people are sending spreadsheets to each other. Multiple spreadsheets can easily get mixed up and the wrong data sent and reported. Look at ways to integrate the different systems the data uses and consider whether automation may be the answer to your problems.

Processing Payroll

When you have all the information you can look at the calculations. Consider payroll systems that allow you to enter all the contractual information and tax rates to calculate the correct payroll. Often there are several approval points in this part of the process. Look for workflow that will automatically notify the approver and record what and when they approved it. Review which parts of the process are manual and replace this activity with an automated payment provider.

Non-employee payments

Finally, you need to file reports with the tax authorities and third-party providers. Instead of manually uploading to different provider portals, investigate if they can integrate with your payroll system. If not, then it is possible for a robot (robotic process automation) to log into a portal and upload on your behalf.

Conclusion

It’s clear that there are lots of opportunities to improve the efficiency and quality of work in payroll. Start by defining and discussing the process with the people in your team who do it every day. Use their experience and expertise to understand where all the manual work happens and then look for ways to reduce waste and mistakes. It’s key to involve the team all the way through and use a process map to clearly explain the problems you’ve found and how to fix them.

This process template from Skore is a great place to start and will guide you along your optimisation journey.

Skore is the process improvement software platform designed to help Accountants map and analyse their processes effortlessly. Get in touch with one of our experts today to find out how we can help you get the most out of your payroll system.