At businesses that employ hourly paid workers, one of the most common problems we see is inefficient payroll. Employees get paid every month, so on the face of it there’s no problem. But from capturing time to transferring money, the process of paying people can waste huge amounts of time and cost up to 1.5% of monthly payroll. Here, we look at what the problems are – and how to fix them.
The problem with payroll
On the face of it, payroll is simple. Multiply hours worked by the rate of pay, send the numbers to finance, and you’re done. The reality, of course, is more complex:
1. Capturing time: It’s often manual, even paper-based, and massively prone to error.
2. Collating data: Turning manual timesheets into data that can be analysed creates even more potential for mistakes.
3. Authorisation and sending to payroll: Fragmented data is harder to see and sign off.
4. Calculation: This can be a serious headache for businesses that pay different rates
depending on factors like location, day of the week, hours worked and age.
5. Processing: And if there are any payslip errors, tracking them can be a huge hassle.
The cost of ‘payroll pain’ is mostly financial. But it impacts business in many ways:
Wasted time and money: At one 3,000-employee business in the UK, the payroll run tied up a three-man team for 3-5 days each month.
Dissatisfied employees: Payroll glitches can easily dent morale, customer service and productivity.
Poor visibility: Without a clear view of hours, rates and pay, businesses find it hard to make cost-related decisions.
Too much pressure: Payroll inefficiency creates an even greater burden on an already stressed resource.
Compliance risk: New laws are putting more pressure on businesses with hourly paid or shift workers to record, maintain and publish accurate records of hours worked.
Why do businesses put up with payroll pain?
“If it ain’t broke, don’t fix it” applies to many payroll systems. Businesses are rightly scared of disrupting a system that works, however imperfectly. Also, broken payroll can be hard to see. Head office may simply not know how much admin work is needed to keep the payroll system working. Finally no-one ‘owns’ end-to-end payroll: there’s little incentive for either HR or finance to look at the big picture.
Pay that works
There’s a one-word answer to fixing payroll: digitisation. And this doesn’t mean ripping out and disrupting an entrenched system. Using mobile apps, cloud-based data and API technology, any organisation can shift immediately to a dramatically more efficient way of managing payroll data flow.
With its payroll integrations, Deputy’s time capture and scheduling can create an end-to-end process that’s simple, accurate, transparent, and auditable. The time taken on monthly payroll can typically shrink down from days to just hours.
“Deputy is saving us time and money by replacing manual systems. From an accounts point of view, it’s probably saving around two or three days a month in reporting and reconciling timesheets to payroll.”
– Jon Peilow, Director of Finance, Castle Hotel
Deputy solves all the core issues in payroll
Time capture and approval: Employees clock on and off with a mobile app, onsite kiosk or SMS, with timesheets generated automatically and instantly available for review and approval. Any queries can be solved before timesheets are sent to payroll. Deputy also manages custom pay rates, solving one of the biggest challenges in the payroll process.
Payroll integration: Open APIs mean Deputy integrates easily into corporate payroll systems (and popular applications like Xero and Sage) eliminating the other key manual step in the gross pay data flow process. Finance staff are freed up from tedious admin and firefighting.
Reporting and compliance: Deputy creates an accurate audit trail of employee details and makes it easy to manage pay rates, accrue leave and track time worked, breaks taken and paid time off.
Transformational change: Fixing payroll with Deputy doesn’t just make life easier for managers, employees and finance departments. By radically simplifying a process that has always held back businesses with hourly paid or shift workers, it sets you up to be more agile, more responsive and more cost-efficient.
Make Pay Work
Download the Making Pay Work E-Book to learn more.