Ensuring employee’s paychecks are correct and on time, every time, is one of the top challenges for business owners. In the early days of a company’s life, managing payroll for a handful of employees is fairly straightforward. But as you add to your team and your business grows, recording, tracking, reporting time and attendance and meeting payroll deadlines can rapidly become overwhelming.
While every company is unique in its payroll process needs, every business can benefit from an improved payroll management process. However, knowing exactly what to change or implement to have the greatest impact can be a challenge. Strategic improvements will always prove to be a valuable investment over random changes.
Here are seven ways you can quickly improve your existing payroll management process from Security Business Capital:
Consolidate Pay Schedules and Systems
Many businesses choose to maintain different pay schedules (e.g. weekly paydays for managers and bi-weekly paydays for hourly employees). While opting for different pay schedules might make sense on some levels, it can easily lead to errors in your payroll process. It also prevents your payroll department from operating as efficiently as possible. Minimizing or consolidating pay cycles can help you avoid the duplication of multiple processes and lessen the chance of errors.
Automate Your Payroll Process
Processing payroll ties up valuable time and resources, especially when done manually. It also makes your business more susceptible to mistakes that can result in severe penalties (e.g. forgetting to record paper checks, running payroll too late, etc.) If you own a rapidly growing business that has a steadily increasing number of employees, payroll processing can quickly become a challenge. Automating your payroll process can help you improve accuracy in data entry and significantly decrease the time and resources spent on payroll management.
Provide Continual Education and Training
Even though HR and payroll departments have distinct roles, they share functions that are crucial to your business’ growth and success. Offering training sessions to your HR staff is a great way to bring these two departments together, encourage collaboration, and improve your company’s payroll management process. Maintaining regular training will also ensure your HR and payroll professionals stay “up to speed” on changes in technology, available tools and services, and regulations.
Distribute Payroll Duties Among Your Staff
If your business only has one person running its payroll system, it is easier for fraudulent activities to take place and make it harder to spot them. It can also make it difficult to meet deadlines and maintain accuracy. Distributing responsibilities for timekeeping, updating employee information, payroll authorization, reconciling payroll, and distributing paychecks among your staff will ensure the entire workload does not fall on one individual’s shoulders and help create a more cohesive team.
Stay up to Date on State/Federal Tax Procedures
Roughly 40 percent of small to medium-size businesses in the U.S. make payroll mistakes, according to the IRS. Thus, they end up paying a payroll penalty each year for incorrect filing, failing to deposit withholdings, or depositing the wrong amount of withholdings – and incur penalties averaging $845 a year. To avoid costly mistakes and delays, make reviewing IRS and other government agency compliance rules and regulations a mandatory element of your ongoing processes.
Document and Audit Your Payroll Process
Once you have developed a payroll process that works best for your business, make sure you document these procedures. Maintaining a standard payroll processing manual makes it easier to identify weak points in the process and is essential in situations where processing must be done manually. This strategy is also useful when auditing your payroll system. If you have frequent payroll complaints, an audit will help you identify discrepancies and review your policies for accuracy and clarity.
Consider Outsourcing Payroll Tasks
As time goes on, tasks like payroll can become overwhelming for a growing company, demanding more time and effort. Rather than managing payroll solely in-house, consider outsourcing your payroll tasks. If you also need extra cash to meet payroll on time, every time, payroll funding can help you fulfill both of these needs. Partnering with a payroll funding company that utilizes accounts receivable financing, allows your business to convert its slow-paying receivables into immediate cash to cover payroll and payroll taxes to fuel further growth.
With proper planning, you can create a smooth payroll process that boosts employee’s happiness, improves company morale and productivity. Developing a strategy and streamlining your payroll process will also help you stay on top of payroll tasks and prevent payroll-related headaches.
How Payroll Funding Can Help Your Growing Business
Could your business benefit from the extra cash payroll funding provides to manage rapid growth and easily cover payroll? Payroll funding can give you the confidence that you can meet payroll and other expenses each week, while also ensuring you have enough cash on hand to take on new clients and fund growth. Rather than waiting for 30, 60 or even 90 days to receive payment from clients, you can sell your invoices and receive funds within a day or two.
Are you curious about how this form of financing can help your business grow? Security Business Capital specializes in helping companies secure the funds they need to operate smoothly, grow their business and take advantage of opportunities. To learn more about what payroll funding can offer your company in growth and flexibility contact us for a free quote or consultation.