Long gone is the era when employees would land a job and stay there forever – from hire to retire. The modern business world has brought about a shift in employee behavior – new-age employees prioritize job satisfaction and engagement with their company and work culture. Employee engagement has gathered a lot of hype in recent years due to unforeseen work scenarios. Wasn’t employee engagement critical before the COVID era? It was! But the term wasn’t widely recognized across organizations. However, organizations have started considering employee engagement as a vital factor as it is directly related to overall productivity and, thus, profitability.

Disengaged employees are more likely to make mistakes 60% more often than engaged ones.

We all can agree that employee engagement and retention are at the top of HR managers’ priority lists. They are increasingly finding ways to keep both in-house and remote employees engaged, not with standing the proximity. Now, if you hear that employee engagement starts with payroll, what would your views be? Try to put yourself in your employees’ shoes – would you be willing to work wholeheartedly if you knew there could be compensation glitches at the end of the month? Or, your salary could get delayed, or there could be mistakes in payroll calculations. Ironically, everyone works for money, whether or not you agree. If you get your monthly wages credited on time without any errors, you will likely be more enthusiastic about working the next day. Thus, we can say payroll directly impacts employee productivity, the revenue of the company, and organizational reputation. Like it is well-communicated, employee engagement starts with payroll. However, is payroll just about wages? No, it’s not. It incorporates additional perks and benefits, competitive pay, insurance and tax assistance, employee empowerment, and more. Here is how payroll can impact employee engagement:

How can payroll impact employee engagement?

• Payroll Errors

  Good payroll management incorporates accurate salary calculations considering leaves, overtime pay, additional benefits, and taxes. Any error calculating these numbers can lead to late or inaccurate payments, eventually frustrating the employees. In addition, no organization should face a situation where employees can question their administrative caliber or doubt their intentions.

  Accurate categorization of employees is also crucial for accurate salary cycles. An erroneous payroll creates distrust and may even make the employees resign early, directly impacting the company’s revenue.

• Non-compliance with laws

  Nowadays, businesses deal with cross-country operations more than ever. Moreover, the remote and hybrid work cultures have allowed remote employees to work from their comfort zone. However, while doing so, employers must follow the payroll rules and laws applicable to different countries or states. Non-compliance with such laws or rules may result in hefty penalties or legal actions against the company.

  Employers must also pay gratuities and provident funds to employees as per government laws. Failing to do so can also lead to penalties or, even worse, cost an organization its reputation. Employees often choose to switch jobs in such situations, and hiring for the vacant positions can turn out to be costly.

According to a survey, the cost of hiring an employee for a vacant position is around $4000.

• Lack of Transparency

  Employees today look for workplaces that provide a transparent and healthy work environment. They want a thorough understanding of payroll management, including their wages, taxes, deductions, etc. For instance, if an employee has doubts about the received salary or wants to know the payroll particulars, he/she would have to approach the concerned person and request a thorough discussion of deductions. The concerned person will then have to explain the unpaid taxes, absences, insurance, etc. The overall process will devastate not only the employee but also the overworked accounting person. Such confrontations will ultimately demotivate employees and waste time – all this can be avoided by automating payroll processing.

Also Read: A Business Case for Modernizing your Payroll Process

Ways payroll can ensure employee engagement

• Error-free salary and tax calculations

  When you care for someone’s needs, they will always put you first. The same goes with an organizational structure – the more you keep your employees happy and satisfied, the more they will be dedicated to their work. With countless discussions happening around payroll management, organizations have finally started to recognize the importance of accuracy if they want to retain the best talent and earn their loyalty or commitment. One of the best ways to keep employees satisfied is by paying the monthly wages on time with accurate calculations. This can only happen with an automated payroll management service. Integrating automation into the payroll processing help streamlines the workflow with error-free salary and tax calculations.

• Integration with time and attendance recording systems

  Manual data entry into the time sheets is probably the last thing employees would prefer doing. Moreover, there are countless possibilities of data getting altered or lost while manually handling the time sheets. On the other hand, automated payroll management services provide accurate time and attendance records and offer employees more clarity on their shifts and overtime payments. Furthermore, this helpsemployees gain more confidence about their expected pay and saves countless hours of payroll management teams spent on manually tracking and reconciling hours.

• Accurate leave record management

  A good payroll management service ensures that the leave structures and policies are clearly defined and executed. Leaves management is the most common factor causing a rift in the relationship between an employee and an HR manager. Apart from the work schedules, employees also wish their time to be respected and handled carefully. An automated payroll management system eliminates these leave disputes. The software enables employees to clearly understand their leave status in real time, allowing them to plan their time effortlessly and efficiently. This makes employees feel valued, directly impacting employee engagement and productivity.

• Self-service options

  Are you keeping your employees from their employment data? Don’t. Allowing your employees access to the employment details such as salary structures, policies, tax deductions, benefits, insurance policies, timesheets, time-off data, and more enhances their contentment level. They feel job security and satisfaction, which in turn increases productivity. In addition, some payroll management service providers offer mobile apps to have greater accessibility, enabling employees to access the data from anywhere, anytime.

How does an outsourced payroll service increase employee engagement?

We saw how payroll affects employee engagement and productivity and the ways payroll can enhance employee engagement. But not all companies can afford the automation costs. This is where outsourcing comes to the rescue. Payroll outsourcing gives wings to your employee engagement initiative. The payroll service provider takes care of every integral part of the payroll process, including monthly wages, employee categorization, tax calculations, leaves deductions, additional benefits, and more. You don’t have to worry about the specific payroll or tax laws that you must adhere to, nor will you need to supervise the taxes paid and other data.

Payroll outsourcing ensures that you are delegating the responsibility to a team of experts, and you can expect accuracy and punctuality in your payroll processing. Employees will have access to a self-service portal where they can easily access the data related to their leaves, overtime, tax variations, and more. In addition, an error-free payroll with automated leave management and attendance system enhances the employee experience.

Conclusion

Exela HR Solutions has a team of experts that can help enhance your payroll processing and make sure your employees’ payroll expectations are met. Our team recognizes your business requirements and provides the best-in-class payroll processing that will boost your employee engagement and productivity. Our aim is to ease your payroll processes so that you can focus on business strategy and revenue growth and provide your employees with error-free and smooth payroll processing.

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.

Employees are the backbone of any organization – we all know that. They are the wheels that keep the business moving, which is precisely why it is important to take their needs and feedback into consideration. When it comes to employee satisfaction, it is no secret that payroll processing has a huge role to play in the employee journey – the smoother the payroll processes, the happier the employees. Unfortunately, traditional and outdated payroll systems make the payroll process cycle exceptionally time-consuming and error-prone. This can cause delays in payments and financial discrepancies, sooner or later leading to decreased employee morale and productivity.

According to a study, 29% of businesses use older (10 years or more) payroll systems.

Nevertheless, for just about any roadblock caused due to traditional methods, modern technology has a solution. New-age tech like Artificial Intelligence (AI), Machine Learning (ML), and Cloud technology are taking over the market, furnishing best-in-class solutions to organizational processes worldwide – with payroll no exception. Unlike traditional payroll processes, integrating modern technologies or outsourcing payroll ensures timely payments and a hassle-free, smooth employee experience. As a result, organizations are increasingly adopting a modern approach to HR for improved employee engagement and retention techniques.

A study stated that 40% of organizations are more likely to modernize their payroll systems by 2023.

As employees nowadays are more attracted to a more consumer-like, mobile-first experience while dealing with HR, organizations must provide them with modern, easy-to-use HR tools. Here are the top 5 reasons you should consider modernizing your payroll processes.

Top 5 reasons you should modernize your payroll processes

• Time Savings

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  According to a study, business owners spend almost 5 hours calculating, filing, and paying payroll taxes.

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  If you are operating payroll internally, you must have noticed the excessive time it takes to complete even the most common tasks. This is because payroll entails more than just paying wages – it involves maintaining employee records, calculating wages, filing taxes, and issuing pay slips considering the deductions. And using manual processes such as spreadsheets can take you nowhere. This is where the need for an intelligent solution comes into the picture. With a cloud-enabled payroll system, it becomes easier than ever to perform payroll tasks in a matter of minutes. Moreover, outsourcing payroll services is yet another lucrative option, as long as you find a payroll services provider that suits your unique HR needs. Payroll outsourcing solutions take care of your daily, weekly, and monthly payroll tasks to alleviate your burden and allow you time to focus on revenue-generating activities.

• Fewer Mistakes

  Payroll is essentially repetitive – spreadsheets to update daily, time and attendance data entries, and up-to-date documentation for future references. When businesses use manual processes for payroll calculations, human errors can creep in easily. This might lead to overpaying or underpaying an employee or miscalculating their leaves, ultimately lowering employee morale. In contrast, automating these repetitive tasks leveraging robotic process automation (RPA) and other technologies can eliminate errors and reduces the time required for the end-to-end payroll process.

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  Almost 70-80% of repetitive, rules-based activities can be automated.

Also Read: Enhancing HR efficiency with a Revolutionary Payroll Management System

• Lower Cost

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  Almost half of the small businesses get fined (over $850/year) for late or missed tax payments.

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  There are specific compliance requirements that businesses need to adhere to. Apart from the usual expenses, even a slight mistake in the payroll or tax filing can lead to unforeseen circumstances, such as penalties or legal actions. Integrating automation in your payroll processes helps cut costs, reduce payroll errors, and maintain compliance requirements. You won’t need to learn new tax tables or monotonously update spreadsheet formulas anymore.

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  Businesses that opted for automated payroll systems have witnessed an 80% reduction in all payroll costs.

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  Moreover, opting for payroll outsourcing is the greatest choice of all time – payroll outsourcing companies ensure your payments to employees and tax liabilities are accurate and timely, helping you avoid penalties or legal disputes.

• Greater Security

  When it comes to maintaining the sensitive payroll data of thousands of employees, organizations often make mistakes relying on manual processes. As a result, it becomes exceptionally overwhelming, potentially leading to increased errors or data loss, costing organizations a small fortune. On the other hand, an automated payroll system can put robust financial control in place, giving payroll teams better visibility into transactions through audit trails and a set of rules to help prevent potential fraud.

• Elevated Employee Satisfaction

  Satisfied and enthusiastic employees are all an organization can ask for, apart from revenue. The more you keep your employees engaged and productive, the better they can contribute to your business’s success. Modernizing your payroll processes ensures timely and accurate payments to employees. Moreover, digitized solutions give your employees the leverage to explore self-service platforms, enabling them to access employee data. Today, more than ever, employees care about their experience throughout their employment tenure. This is what needs to be acknowledged.

Payroll modernization trends

There are countless organizations out there that need a payroll overhaul. If you are one of them, these trends are for you. Here are the payroll modernization trends that will help your organization stand out in the modern business world.

• Cloud Enablement

  With the emergence of hybrid and remote work cultures, significant changes have occurred in the business world. And the primary reason behind these changes is the challenges organizations face in keeping employees engaged and productive. Tech trends like cloud technology have been the savior of organizations incorporating these changes. Cloud technology enables employees and HRs to collaborate in real-time through databases, abjuring the need for expensive, static server deployments to host data and applications. In addition, this also helps organizations support a geographically distributed workforce more quickly and efficiently.

• Cybersecurity for HR & Payroll

  Security is of utmost importance to any organization. With the emergence of advanced technologies and tools that foster continuous connectivity through the web, cybersecurity has become a greater priority for businesses of all sizes. Unfortunately, the lack of direct physical oversight has introduced negative user behavior trends. However, the real threat lies in IT teams’ limitations in covering all the endpoints of a distributed network. Additionally, due to the sensitive data handled by payroll systems, cybersecurity becomes a top priority for businesses looking to safeguard their data from malicious attacks.

• Payroll Outsourcing

  Any errors in the payroll can cause the organization reputational and financial damage. Moreover, businesses must keep abreast of the recent employment and tax laws in all the company’s jurisdictions. Small to medium size businesses usually lack the know-how and capital required to manage payroll effectively. As a result, several business owners are turning to payroll outsourcing to eliminate this stress. Outsourcing payroll ensures efficient and timely management of payroll processes, technological updates, and better compliance and reporting.

It’s a wrap!

In a nutshell, modernizing payroll processes help keep your business ahead of the curve. The above reasons and payroll modernization trends will help you understand the payroll landscape. At Exela HR solutions, we offer a wide range of solutions to suit your unique business requirements and HR needs. Talk to our experts today to get started with a payroll modernization strategy for your business with Exela HR Solutions!

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.

First, let's start by knowing what a payroll management system is and how it helps the organization and the HR department. To understand it clearly, let us first look at how the HR department of any company is responsible for calculating, distributing, and maintaining the salaries of the employees working in an organization. This is why the payroll system is directly linked to the organization’s HR department. The people working in HR interact with it and will be affected by the efficient performance or lack of efficient performance of the payroll system.

In this article, we will outline several key points that will give you a detailed understanding of the payroll system.

The recent trend of using paid payment software applications instead of traditional methods like spreadsheets or paper has brought about a lot of changes. It has made the payment process faster while also making a lot of functionalities and processes clearer for the employees and the HR team.

For example, in the good old days, if an employee had to update his/her banking information, they would have had to obtain paper proof of the change from the bank, then submit it to HR. The HR then would have had to verify the new information, go to the bank/payroll processor, and submit a physical form notifying them of the changes in the banking information of one of their employees. The bank/payroll processor would then have had to verify those changes again and finally update it in their system. Could you imagine how much time it would’ve taken for this entire process to complete? Days, if not weeks! But today, it takes less than three minutes for an employee to log in to the payroll portal, click into the update section, and update their banking information.

This is progress.

Let us now look at what challenges HR professionals face today and mistakes, both common and not-so-common that can be corrected with the help of a properly designed, high-performance payroll management system.

Payroll Management Challenges for HR

In recent years, technology has infiltrated the payroll landscape in many ways – bringing flexibility in pay and innovating time reporting. Nevertheless, even tiny errors in payment processing can harm users – losing hard-earned money is tough. Thus, organizations should consider it an integral part of their business processes. A business thrives when employees are happy, and paying salaries correctly and on time can make them happy. This is why we refer to payroll as one of the key pillars of success in any organization.

Numerous factors come into account while managing payroll processing – employee records, leaves, bonuses, taxes, and more. The payroll management systems can help unravel the challenges associated with managing these factors, as it can get overwhelming when your organization deals with several employees. Payroll software is a savior in such cases – it helps you get the desired data at the requested time. It won’t be surprising to know that each organization wants to retain the best talent. And retention strategies exclusively depend on the benefits and payroll administration – we can’t agree more with this.

Also Read: 5 Trends That are Like to Shape the Future of Payroll Processing

Payment errors from HR management

Now that you are aware of the payroll challenges, you must acknowledge common errors that might occur while managing the payroll of any business. Most of these errors are unintentional and caused due to traditional age-old working methods. The most common mistakes in payroll processing from HR management are irregular payroll cycles, incorrect overtime calculations, delays in providing tax forms, tax calculation errors, incorrect categorization of employees, delays in tax deposits, vulnerable payroll data, and more.

Payroll is crucial to the employee experience (EX). A hassle-free and smooth payroll process are the least an employee can expect in exchange for the services – any errors or miscalculations can lead to dissatisfaction. Moreover, these unforeseen errors can expose your organization to compliance risks, loss of credibility, and financial penalties.

This is where the payroll management systems come into the picture. They enable management teams to access desired data, get analytics, create reports, automate payroll cycles, tax calculations, and more. It entirely depends on the companies and what they really need in their payroll system.

Mistakes that HR generally makes without proper payroll systems in place

• Missing payment deadlines is something that can essentially create a sense of mistrust in HR and the organization, in turn affecting employee performance.
• Clearing past payments can sometimes be an issue. In many unforeseen circumstances, organizations might run into a financial crisis, leading to employee pay cuts. The organization has to pay these pending payments after a while, which can only be possible with adequately maintained records.
• Vulnerable payroll data is the most significant risk of all time. Sometimes organizations find it hard to back up essential payroll data, or even if they have a backup, it is highly vulnerable to risks if handled manually. Payroll management systems make sure your data is safe.
• For organizations having thousands of workers, it gets overwhelming to calculate the taxes. Moreover, manually handling taxes for larger sets of employees can get you in trouble.
• Most times, HR face problems in the classification of employees. It can significantly impact the payroll, as the roles should be carefully considered.
• In today’s working scenarios, most employees work from different locations, and some work at their convenient hours. Calculating salaries for each, including their overtime, gets complex with manual processing. However, with a payroll management system, you can never go wrong with calculations.

Impact of Payroll Deficits on the Employer

Running a successful business is not just about making money; it’s about your organizational reputation, employee satisfaction, and growth. Nevertheless, some organizations often misinterpret the true definition of employee satisfaction. If you want your employees to work with the same performance, they need motivation and clarity from HR. Having bugs in payroll processing cannot make them happy or motivated. Such unforeseen circumstances tend to slow down their work and efficiency – they might also think of switching to another organization. These may seem like trivial changes, but they can have a significant impact on your business.

How outsourcing can improve HR management and employee relations

Here’s how compensation management can help improve employee and HR management relationships.

• If you roll out monthly wages on time, employees will not consider bothering HR.
• You can never go wrong with calculations – monthly salaries and exact deductions.
• HR can focus on more priority tasks without spending too much time on cost management.
• Accurate classification of employees and salary calculation can lead to better payroll cycles.

Payment management system stats

These numbers will give you a brief idea of how payroll management systems have been revolutionary for organizations:

• Most workers in the US – up to 93% – are paid by direct deposit. This makes it imperative to record all the payments precisely.
• The vast majority of employees – 93% – believe their wages are paid on time. However, we must consider the remaining 7% too.
• Around 60% of employees say they are confident that the calculation and other deductions made are accurate, while the remaining may still be in the tragedy of something that went wrong.

How does the compensation management system allow HR management to avoid mistakes?

Deploying a payroll management system is no different than adding an excellent HR resource to your team. However, the payroll management system can perform all tasks that humans cannot without any errors.

• Manage employee files and documents such as salaries, past performance, appraisal documents, and tax sheets.
• Follows a specified payroll cycle to ensure everyone gets their salaries on time.
• Keep track of employee performance and give them feedback.
• Recognize the best performers and design reward systems for them.
• Access payroll data with ease and security to have a better understanding.
• Automate the majority of payroll tasks, leaving no room for errors.

It’s a wrap!

Exela HR Solutions is a leader in HR outsourcing and ensures you get the best-in-class services. With Exela HR Solutions as your HR partner, you can never go wrong with your payroll processing, instantly increasing employee productivity and satisfaction in your organization. From classifying employees and calculating their wages, deductions, taxes, and other benefits to streamlining payroll cycles for timely payments, Exela HR Solutions can get it done for you. Get in touch with our experts to design the best HR strategies for your business. Get Exela HR Solutions and propel your business into the future!

Sources: google.com | en.wikipedia.org | reddit.com | twitter.com | quora.com | paysquare.com

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.

Few industries of the economy play as paramount a role in creating new valuable job opportunities as the manufacturing sector, and fewer even can successfully embody the rapidly evolving workplace following the pandemic. Yet, the manufacturing industry was one of the few sectors that performed an expert pivot and managed to, at times, even profitably, hold the fort.

While this rapid growth is, as many will bear witness, a good problem to have, a manufacturing business must fill several roles to ensure smooth functioning, for example, machine operators, management, packers, shippers, and many others with varying pay scales. The sheer volume of employee and payroll management that manufacturing industries need is a definite HR nightmare. One must also consider aspects of the administration process, such as different pay cycles, different rate calculations, and the breakdown of various labor when handling payroll for businesses in the manufacturing industry. To summarize, dealing with the intricacies of payroll for the manufacturing industry should be efficient and adaptable. To establish a working payroll system in the manufacturing industry, one must first understand the industry’s main challenges or payroll issues.

Payroll processing challenges in the manufacturing industry

• Compliance

  Compliance is one of the foremost issues organizations face today, especially in manufacturing. Different countries and states have their own set of labor laws and regulations. Such laws concerning employee rights, worker unions, and business authorization must also be considered when dealing with payroll processing. Global payroll processing units must be up-to-date with the changes in laws to keep up with the edicts of the land. Organizations must establish a payroll process incorporating any major or minor change in the legislation to ensure compliance.

• Taxation

  Most companies are responsible for deducting applicable taxes before making payments and managing employee expenses. The tax department makes modifications on a regular basis to ensure the country’s economic health. To prevent penalties and additional effort, such changes must be put into the payroll system within the timeframe to maintain compliance. In the manufacturing industry, this is even more complicated due to the substantial volume of levels and tax brackets that employees and staff fall under.

• Accuracy

  Several factors influence an employee's pay scale. If you are processing payroll manually with spreadsheets and basic tools, your calculations are at risk of human errors, not to mention time-consuming. According to a survey, half of the analyzed small manufacturing companies stated manual data entry to be one of their biggest challenges. With an increasing number of employees, the level of complexity also upturns. Moreover, if the tax organizations notice inconsistencies in your tax returns or if there is a substantial understatement of the taxes owed, your organization can even face penalties. Furthermore, you might also get a penalty for submitting incorrect amounts. In a nutshell, any small error in payroll can cost you a fortune – and only automation can save you from this.

• Privacy and security

  In today’s ever-evolving business world, privacy and data protection concerns are more significant than ever. The frequency of data breaches and cyber-attacks is increasing by folds. Today, businesses have access to sensitive data that cannot be misplaced or misused. A payroll system also deals with highly sensitive data like bank account numbers, addresses, etc., making it even more crucial for organizations to add security and confidentiality to the payroll records. A leak at this stage can wreak havoc on your reputation, negatively impact production, and even cost you a fortune. So, ensure your payroll records are handled, maintained confidentially, and stored in a secure environment. In the case of the absence of privacy legislation, employers are encouraged to put together a detailed privacy policy to minimize the risk of security breaches.

Also Read: 5 Trends that are Like to Shape the Future of Payroll Processing

• Technology integration

  Technology can be your savior in any kind of job by eliminating manual tasks, integrating automation, and streamlining processes. While we understand how the manufacturing industry works, most processes are still manual and follow traditional work cultures. Small companies work under stringent budgets and higher pressures, restricting them from transforming or automating processes. In such cases, it can get really overwhelming to do tasks such as data transfers, calculating wages, hiring new employees, keeping records of every transaction, managing work hours, and more. This is where you can bring technology into the picture – technology integration not only helps streamline these tasks but also helps you stay ahead of the curve. In addition, it can benefit your payroll processing tremendously, eliminating errors, reducing time and effort, and increasing efficiency.

• Misclassification

  Irrespective of the size, manufacturing businesses today have a mix of full-time employees, part-time employees, independent contractors, seasonal contractors, or gig workers. Classifying the type of employees correctly is a crucial part of the payroll process. Misclassification, such as incorrectly categorizing employees, can cause serious issues for the business and the employees. For instance, contractors or gig workers are entitled to weekly or monthly payments, while employees are entitled to monthly payouts. In addition, certain employment benefits or unemployment compensation only apply to full-time employees. Even if you, as an organization or small business, do not take misclassification seriously, tax authorities definitely will. In a nutshell, correctly classifying your workforce is beneficial and critical for companies.

Recruitment process outsourcing (RPO)

The skills gap, privacy and security concerns, or other payroll challenges affecting the manufacturing industry make it imperative to attract talent, fill jobs, and retain them. Manufacturing RPO (Recruitment Process Outsourcing) provides recruitment expertise and scalability from requisition to onboarding, completely aligned with your organizational goals and culture. Recruitment Process Outsourcing arms the manufacturing industry with the tools and technologies they need to ensure robust HR processes. If your organization struggles to keep up with payroll processing and accelerating recruitment efforts, consider a recruitment partner that manages your recruitment processes end-to-end, from hiring to payroll. Here’s what you get when you outsource HR services:

• Instant Access to a larger talent pool
• Lower labor costs
• Reduced hiring TATs
• 100% accuracy in processes
• Zero security or privacy concerns.

Why Exela HRO?

The future of manufacturing faces numerous challenges due to accelerated technological advancements, consumer expectations, and emerging markets. As the obstacles intensify, the need for the right talent also upsurges. Pretty soon, it will be imperative to have a talent partner who can promptly mobilize in response to your organizational requirements. At Exela, our human resource experts provide an agile solution tailored to your company’s needs.

Our experts help clients align their priorities, performance, business values, and human resources with in-depth industrial expertise, robust data analysis, and powerful insights. Exela HRO can help you build technology-driven HR strategies to fuel business growth. If you struggle to get through your payroll or streamline other HR processes, get help from Exela HR solutions offering world-class global payroll processing, recruitment, HRBP services, and compensation and benefits. Talk to our experts today to know more!

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.

We are way past the recovery phase from the COVID-19 impacts – businesses are doing better than simply recovering. According to a survey, organizations have spent a record-breaking $4.3 trillion on acquisitions and global mergers this year. This is the second-highest record compared to the numbers from 2015 of $4.8 trillion. Global expansion has been crucial for companies in opening the doors for potentially lucrative new markets. In addition, in today’s market scenario, global expansion is even more compelling as it relieves businesses from supply chain problems and labor shortages. However, overseas expansion isn’t simple – it comes with new challenges. A self-explanatory one is a payroll. Payroll processing for small businesses or giant companies is almost the same – in simple terms, it is the process of paying your employees. This incorporates calculating salaries, withholding taxes and other deductions, and issuing payments. To the benefit of businesses worldwide, technology has infiltrated payroll processing in recent years, bringing flexibility in pay and innovating time reporting. This seems upright for companies struggling through their human resource processes and payroll management. Let’s have a peek at what is waiting for payroll in the future.

The Future of Payroll

We witnessed several changes in how human resources operate over the recent years, yet from the payroll point of view, it pretty much stayed the same. However, with new evolutions, payroll is waking up to the digital revolution. The introduction of automation and other technologies has bought an entirely new approach making things more exciting and attractive. In today’s fast-paced world, the approach is to do more with fewer resources. Payroll modernization holds the ability to deliver excellence to companies. Transforming your approach to remunerating can help you attract, bring, engage, and retain top talent and drive greater operational efficiency.

Robotic process automation (RPA) has been a game changer for payroll processing, introducing cost savings and automating manual entries and payroll runs. Nevertheless, payroll automation is still in its infancy, but the next advancement will be real-time pay. Let’s take a look at 5 payroll trends that are likely to shape the future of payroll.

5 Payroll Future trends – Payroll in the coming years

Here are five trends to anticipate in the future of payroll.

• Increased Use of Cloud Technology

  Cloud technology has been on the hype for the past few years – almost every organization has brought their operations to the cloud. So, why not payroll processing? Cloud-based payroll management software not only helps you stay compliant with these regulations but also helps handle tax compliance with ease. Moreover, the integration of cloud technology empowers HR managers to view and modify payroll from anywhere, anytime, incorporating flexibility and cost-effectiveness.

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  The cloud-based payroll software market is anticipated to reach over $13.3 million by 2026.

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  According to a survey, 57% of organizations have already embraced cloud technology for payroll processing, while 27% are planning to implement a cloud solution. Additionally, with the emergence of remote and hybrid work cultures, it has become more crucial for HR teams to process payrolls remotely. This has made cloud systems the perfect fit for global payroll processing.

Also Read: The Top 3 Benefits of Payroll Management Services

• Embracing Artificial Intelligence

  We’ve all heard a theory of robots taking over the world someday. While the assumption may seem a tad far-fetched, the indication of machines replacing humans is becoming more apparent – and artificial intelligence is to blame. The concept isn’t new to all of us. AI is slowly and steadily seeping into all sorts of businesses and departments – and the payroll industry is no exception. Several organizations are embracing AI-driven tools for storing and managing payroll data with ease. In addition to leveraging the power of AI, many companies are also incorporating AI-driven chatbots that free up time for HR and payroll teams. Likewise, smart reports are also becoming popular, notifying the concerned teams whether there are input errors and anomalies within their payroll. With AI getting more intelligent with time and the increased access to global payroll data, the user experience, data and analytics, and support improvements are only going to get better. As a result, in the near future, AI-driven payroll systems will bolster the role of payroll processing teams.

• Integration of HR Technology

  You might think of HR and payroll as two distinct disciplines, but essentially, they are connected and come under the same umbrella. Integrating HR software and payroll can help professionals access all the employee information they need from a single dashboard. Moreover, it increases efficiency in managing and maintaining employee data. It is also imperative for HR managers to ensure that employee data is protected and can be easily accessed for future reference. With labor laws getting increasingly complex, it is always beneficial to have essential data handy. With the help of HR technology, you will not only be able to reduce payroll errors but also effectively store past payroll data securely on the cloud. Get a technology you can grow with.

• Improved Data Security

  The pandemic has essentially been a great learning experience for different aspects of a business. One of the key lessons concerning payroll was being able to access consolidated, real-time payroll data for globally situated teams for tracking global payroll costs and making more informed decisions. However, centralized data asks for more integrated security. In recent years, according to new laws, payroll software needs to be GDPR-compliant. This limits how the data can be used. Every organization out there holds massive volumes of sensitive data such as account numbers, social security numbers, wages, addresses, and more. New advancements such as two-factor authentication help access such data securely.

• Bank integrations for secure and faster payments

  Banks and company payroll software are two different entities for many organizations. This leads to a higher turnaround time as the payroll software has to be coordinated with the bank to process payments. With new technological advancements, payroll systems and banks are more likely to work in tandem to make the payroll process simple, more effective, and time-saving. In the dynamic wages industry, faster payments have become more of a norm than just an option. The bank integration significantly improves operational efficiencies, cash flow management, and customer engagement with reduced settlement time, less clearing time, and greater data transparency.

It’s a wrap!

As you see, there are several technological advancements ready to streamline your payroll processes. However, considering the stringent budgets and stiff market situations, businesses can’t afford to invest so much in just the payroll function. This is where businesses like yours can benefit from engaging with third-party payroll outsourcing services like Exela HR Solutions, a leader in global payroll processing and compliance. Get in touch with the Exela HR Solutions team to integrate new payroll trends in your payroll processing. Get Exela HR solutions today and transform your end-to-end HR processes!

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.

The core concept of business is trading goods or services with profit as the intention. Without this motive, an activity cannot be classified as a business, no matter how beneficial. The whole idea of a business revolves around the multiplication of assets. Thereafter, those assets are liquidated, or stakes are proportionately distributed among the contributing entities such as employees, vendors, service providers, and brokers. If this ecosystem is not profitable, the business will eventually cease to be sustainable when funds become extinct. Therefore, business leaders and decision-makers must be convinced that a particular trade, service, hire, or transaction benefits the company by upholding, stabilizing, or multiplying its value. Similarly, while companies became besotted with payroll processing service providers because of the pandemic, it's time to infer if there is any real benefit in engaging payroll software and global payroll processing companies today.

How relevant is global payroll processing in the current market, considering COVID has been receding at an acceleratedsss pace? Well, to answer this, we must first realize that the value of profits is not always monetary. As Einstein puts it, "Not everything that counts can be counted; and not everything that can be counted, counts." This implies that the profits of payroll processing services can benefit an organization through other mediums. But unless those eventually transcend into revenue generation, it's a futile element. So, let's look at the direct and indirect ways payroll management services from reliable and efficient providers can benefit an organization:

The Top 3 Advantages of Outsourcing Payroll Processing Services:

Payroll processing services, Global Payroll processing, Payroll Management Services, Benefits of Payroll software, payroll outsourcing

1. Payroll Outsourcing Reduces Cost-to-Company:

   Let’s commence with the obvious. Irrespective of the nature of your business, whether you run a small enterprise, a private business, a family-owned generational company, a public-listed MNC, a conglomerate, or an establishment spanning across continents, outsourcing payroll always works cheaper than running the entire operation in-house. By eliminating the need to source, hire, and maintain an efficient HR department with competent staff, you'll no longer need to factor in these additional cost overheads. Besides, maintaining an in-house HR team is unlike a single-premium-policy payment. Once you set up an HR department, you'll have to accommodate the employment benefits and liabilities applicable to full-time employees. And, even if you have a relatively small team, you're not exempted from these costs. In fact, smaller HR teams incur higher maintenance cost-per-employee. The principle applied here is simple – larger volumes allow businesses a buffer to play with meager margins. Therefore, third-party payroll outsourcing companies can provide exemplary services at rather nominal costs because they profit from higher sales volumes. So, they target a larger market share which enables them to remain profitable, and so they extend that courtesy to their B2B clients responsible for bringing in the dough – you!

2. Payroll Outsourcing Saves Time:

   Do you know which is the most valuable resource in the universe? Sure, money and assets are tangible and easily calculable. But there is something far more precious, and that resource is time. Because time spent judiciously can earn you significant amounts of money, and time spent chasing a futile endeavor is as good as money lost that could have been earned otherwise. So, instead of executing mundane administrative tasks, you'd rather have your skilled employees brainstorming over sales or marketing strategies, designing better products and associated services, or even streamlining and reinforcing operations, elevating the customer experience, and improving employee satisfaction. Why would anyone wish to waste person-hours over repetitive tasks that annihilate motivation, which only drives the productivity out of your team? Outsourcing payroll management to an external source allows your employees and you to concentrate on your critical roles without deviating from your course or losing focus on trivial jobs.

3. Payroll Outsourcing Reinforces Legal Indemnity:

   Another way to safeguard assets and profitability is to plug all leaks. Tax regulations and labor laws can differ drastically from area to area. And they undergo changes periodically. Failure to comply with even one of these updates can have unforgiving repercussions. Innocent negligence or unfamiliarity can usher you into legal battles and penalties threatening to leave company coffers bone dry. Let's consider a practical situation: technical and legal diversities may be contradictory to those practiced in previous locations if you migrate operations. Your headquarters could remain stable, but what if an employee relocates to another branch? Do you follow the payroll laws of the headquarters or the actual location of work? And what if they're remotely working from another continent altogether? Which laws become applicable then? Not yielding to appropriate regulations can result in fines and loss of reputation, a substantial leak in your bucket. Besides, you must have all your information regarding payroll processing service functions available and accessible for audits or any unforeseen circumstances. Apart from maintaining crisp records for auditing purposes, advanced payroll software and enterprise solutions help track essential information that can be studied and analyzed for better planning. It allows the management to conduct regular reviews, clarify their positions, reinforce responsibilities, and plug all areas of concern. Therefore, to mitigate legal risks, it’s best to outsource payroll functions to experts who will safeguard your company by ensuring hard-earned profits stay within your bucket and don’t drain away.

Also Read: The Ultimate Guide to Efficient Payroll Management

Leaving the Numbers Aside…

While profitability is the crux of any business, one cannot neglect the ramifications of payroll on employees. If we were to ignore the math and think of payroll management from a very humane perspective, we'd concur that something affecting a person's livelihood must be dealt with, with utmost care. If money is crucial for corporations with billions in spending capacity, imagine how much your employees' lives must be impacted by their wages! Remuneration is the foremost reason they even come to work. A delay or miscalculation can have traumatic effects on staff and, by extension, their families and all those relying on their paychecks. Efficiency in handling payroll processes is therefore paramount.

Outsourcing companies offer high-quality, experienced professional expertise because that’s just what they do. They do what they do best, so you can concentrate on the rest. Why would you want to knead dough when baking isn’t your forte? Besides, nowadays, if you pick a good service provider, payroll functions can be highly automated, leaving no room for human error. When a process is system-regulated and automatic, there is lesser scope for mistakes arising out of maleficent intent or negligence. The staff gets paid as per the limitations, slabs, and data that is calibrated & fed into the system. There is no scope for unfair, preferential, or punitive treatment. Appropriate software streamlines processes, making it all very transparent. You're also likely to get comprehensive reports without any extra effort, allowing you to make strategic decisions regarding company accounts.

Exela HR Solutions is a world leader in delivering end-to-end HR services, from recruitment and global payroll processing to HRBP services. We’re here for all your payroll needs. Whether you’re a startup, an MNC, or a conglomerate, we have HR software and solutions for businesses of all types and sizes. Exela Technologies also deals in digital transformation and process automation; thus, you can be sure to have advanced automation and technology along with competent HR expertise. Minimize risks, avoid crises, and improve processing TATs, all with a reduced cost price and higher efficiency with Exela! So, get in touch with us today if you need help with payroll or any other HR function. What are you still thinking about? Try Exela HR Solutions today!

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.

Payroll is an intricate function that requires both experience and expertise. Besides wage computations and disbursements, the HR department must also factor in tax responsibilities and comply with the relevant regulatory bodies. All of this can be complicated and consumes a lot of time. This is why most businesses nowadays prefer hiring a professional payroll outsourcing provider.

The truth is, payroll outsourcing has been around for decades. Many reputed MNCs and global players partner with HRO service providers to surpass the hassles that payroll management brings. Not just big fish, but outsourcing payroll functions to competent consultants greatly benefits start-ups and small firms the most.

Let's take a peek at the prevalent market conditions to comprehend the implications of outsourcing payroll processing thoroughly:

• Businesses have Reopened

Almost every business, regardless of industry, location, and size, has suffered to varying degrees since the onset of the global pandemic. Some have lost their workforce, while others have lost clients. However, after a long hiatus of languishing in the perils of crippled economies, there seems to be renewed hope as things return to normalcy. Shutters are winding upwards, and businesses are looking at recovering their losses against pre-determined slabs. The way they achieve this is simple: increase revenue and cut down on unnecessary costs.

• An Influx of Fresh and Upskilled Talent

Graduates that passed out in 2019 didn’t really get any opportunity to venture out. Then again, 2020 and 2021 added more to the list of unemployed graduates. That’s a cumulative effect of graduates from 2019, 2020, 2021, and 2022 – all actively seeking jobs today. If we were to go by the very first law of the demand and supply ratio, this infers that the value of the existing workforce goes down because of the disproportionate rise. Businesses looking to cut costs may very well hire fresh graduates at a cheaper cost and train them rigorously instead of hiring experienced staff at a higher CTC.

• Sculpting a Lean Businesses Model

Before the pandemic, most businesses had settled into the reap-and-multiply earnings cycle. But today, businesses do not have this luxury. Instead, they’re struggling to stay afloat. That puts them in the sustain-and-rebuild mode. In addition, businesses are attempting to drastically improve the individual performance and efficiency of their employees, which means fewer people must take up greater responsibilities. Moreover, trimming the excess fat, such as expenses from team engagement activities, bonuses, excess admin overheads, additional allowances & benefits, commercial office space & relative maintenance, power usage, amenities, stationery, and miscellaneous costs may also contribute to building lean-cut businesses.

These market conditions are not the most conducive, but organizations that have survived so far have attested that the reason behind their sustenance is their ability to adapt to change. Tweaking processes and policies in sync with the market conditions tops the way this can be achieved. And outsourcing payroll does just that!

How Payroll Outsourcing is vital and relevant in the prevalent market conditions

For starters, the most significant reason businesses outsource payroll is to cut costs. It is significantly cheaper for businesses to hire third-party experts than to run the entire operation in-house. But why is it cheaper? Besides actual cash outflows, a lot of time is invested and wasted in these functions. Of course, it’s not a waste if the end outcome is productive. True, but with unjustifiable TATs and ROIs, it wouldn’t be unfair to call it a waste! Scalability may witness hurdles if you have a fixed number of people managing your payroll. It’s rather challenging to adapt swiftly to erratic market conditions such as large-scale retrenchment or recruitment. Professional payroll providers allow businesses a buffer to scale up or down, as and when required, quickly and efficiently without hampering productivity or efficiency. Let's look at some of the long-term effects of partnering up with a payroll outsourcing provider:

1. Outsourcing Payroll reduces cost heads

It’s simple math. Companies that outsource payroll spend on additional overheads. The most obvious CTC (cost to company) is an HR employee's salary. And despite the size of a company, no matter how small or local, there is usually more than one HR person handling payroll processes. So that's multiple salaries that need to be paid. These aren't one-time investments. Also, only experienced HR personnel usually land up with payroll functions. That means a higher pay package, both of which the current market conditions do not permit. Firstly, fresh recruits lack the experience and expertise to handle this complex task. Then, apart from salaries, HR team personnel have additional associated benefits and perks. The average benefits package is well over 30% of an employee's compensation. That's still just an average; it could be much more, depending on contracts and functions. All of those increase the expense value of the cost heads in your accounts sheets.

By doing away with an in-house payroll processing team, you eliminate the need to pay any additional benefits to non-existing staff. Also, when you hire your own payroll processing staff, you must train them appropriately, especially if they're fresh graduates with no experience in handling such a vital role. From their onboarding, induction, and mandatory compliance courses to getting them familiar with the company procedures, all are time-consuming, highly cost-intensive processes. On average, most companies spend an additional 1/4th of the amount spent on acquiring new payroll staff just to get them oriented. Do you see the white elephant now?

Also Read: The Ultimate Guide to Efficient Payroll Management

2. Payroll Outsourcing ensures compliance with regulatory bodies, avoiding unnecessary fines and penalties

Payroll service providers specialize in payroll functions, among other tasks. They ensure you pay your staff on time. They take the burden of reimbursement calculation, local, state, & central tax computations, incentives, and timely deposits off their clients. There may be severe consequences if inexperienced staff inadvertently violates these due to negligence. Thus, for clarity, every business must have a set of policies and procedures that the employer and employees must comply with. There must be a basic framework of each side's expectations, responsibilities, and functionalities to ensure smooth operations. Besides, being on time with payroll services builds trust among staff, which is crucial when you have a lot of fresh recruits. It enhances teamwork, dedication, productivity, and in turn, profitability. Codes, statutes, regulations, and standards must be met and adhered to. Violations in this regard can drain any lean business leaving them with little to no scope for resurrection. One cannot plead innocence due to ignorance. It is the responsibility of the company's leadership to ensure these criteria are met with strict compliance, failing which there may be consequences that may be challenging to sustain in such times. Insurance, income tax, provident fund, medicare, salary deferrals, and arrears must all have an accessible and transparent audit trail in case of inspections.

Let's assume you just lost an employee to attrition. You must calculate their full and final settlement along with their provident fund, gratuity, and bonuses. When staff is entitled to certain benefits such as encashment of leave upon termination, retirement, or resignation, the persons processing these must be aware and adjust accordingly. They must follow the company policy agreed upon by the employee when joining. If tax is deducted, you must provide appropriate documentation. Likewise, you must be careful to ensure the tax is deposited on time to avoid attracting fines. Remember, fines compounded over time can lead to huge losses from cumulative liabilities. Besides, your reputation and goodwill are also damaged in the bargain. A payroll service provider will ensure you do not face the brunt of unwarranted legal complications.

3. Payroll service providers help you save time-related perceived productivity loss

It may be challenging to forecast total losses based on lost person-hours. But, it is undeniable that when you outsource payroll functions, your HR staff spends lesser time on administrative duties such as leave, attendance, T&E reimbursements, and overtime computation. Especially since COVID, where most companies are managing with limited staff and resources, and they must use both optimally. Instead of burdening an in-house HR team with simple tasks, you can reduce a minimum of 30% of their duties with payroll outsourcing. So your HR staff can get more time for productive work. Engrossing employees in more significant jobs is a huge motivating factor that further enhances productivity among your team members. Dedicating resources to routine, mundane tasks that can be taken care of by another agency that is experienced and competent is unjustifiable.

As you can see, there are several cost benefits to outsourcing payroll services. The costs involved in engaging a good payroll service provider are far lesser than the monetary savings you can accrue.

Considering the stifling economic conditions, businesses just cannot afford to ignore the benefits of engaging with external payroll outsourcing services.

Exela HR Solutions is a world leader in global payroll processing and compliance. Partner with the team that will help rebuild your vision through cost-effective processes. Find out more about our offerings here.

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.

Remuneration is one of the biggest reasons why people come to work. Imagine the stress a professional must endure if there is an error in their salary computation, or worse – if they don’t receive a month’s pay after all their hard work. Payroll processing only appears like an effortless task. But in reality, handling payroll is no joke, and it gets increasingly challenging as the size of your business increases.

The most significant limitation in managing payroll is complying with relevant and area-specific labor and tax laws, which are subject to periodic modifications. Non-compliance can lead to heavy penalties, resulting in your employees' losing faith in the organization. Sure, this also translates to increased employee turnover costs which are heavy on the wallet. But, goodwill and reputation thus lost are incomparable. If you were part of the recruiting panel that took the effort to complete the employee’s hiring cycle, you'd be twitching with disappointment. Payroll processing is a responsible job. And while you may be great at juggling responsibilities, the slightest error in managing payroll will result in disdain and dismay on your staff's faces.

But, we have listed some great tips that will help you combat the usual payroll management problems:

1. Always comply with applicable Laws and Regulations

   Tax regulations and labor laws can differ drastically from area to area. And it would be best if you stay up-to-date with these. Failure to comply with even one of these can have unforgiving repercussions. Innocent negligence or unfamiliarity can still lead to legal battles and penalties. Another scenario is when you decide to expand your business or shift shop to another location. If you migrate operations, technical and legal diversities may be absolutely contradictory to what you may have been accustomed to earlier. Maybe you're still headquartered in the same location, but what if an employee migrates to another branch? Do you follow the payroll laws at the headquarters or the actual location of work? And what if they're remotely working from another continent altogether? Which laws become applicable then? Not yielding to appropriate regulations can result in fines and loss of reputation. Therefore, ensure the payroll processing staff at your organization is well-acquainted with all applicable laws. They must constantly refresh their knowledge and stay updated and current to mitigate any legal risks.

   

2. Conduct appropriate and relevant Payroll Management Training

   Many HR experts are already qualified in payroll management. But, payroll is handled (and mishandled) differently in every organization. While their expertise may be relevant to their previous organization, having your whole HR department trained together will ensure they’re all on the same page. This will assist in collaboration within the department and facilitate a more cohesive team approach. As a result, your payroll system becomes more effective through better allocation, decreasing the stress on your payroll staff. All this is favorable as you get a platform to streamline and discuss processes to arrive at a common conclusion and SOPs, leaving less room for error. Therefore, organizing a payroll management training class for your HR team can be a fruitful step toward effective payroll management.

3. Maintain Transparency in the entire Payroll Process cycle

   Multiple disputes can occur when your employees are clueless about how payroll really functions. This can lead to dissatisfaction among staff and even result in employees leaving your company. Therefore, payroll must be as transparent as possible to gain the trust of your employees. You can achieve this by incorporating essential details such as your company's method and workflow of handling payroll, employee category, reporting accountabilities, availability & realization of paid and unpaid leaves, the appraisal & promotion process, etc. In addition, ensure you display these policies clearly and concisely, ensuring all your employees have effortless, on-demand access to these.

4. Maintain an up-to-date Payroll Calendar

   A payroll calendar outlines the pay cycle's beginning and ending dates while marking dates for incentive payouts. It helps support Human Resource teams in organizing and maintaining payroll service functions by access to verifiable data. Creating payroll calendars is not challenging as multiple payroll software are available nowadays. You can opt for entirely automated and hybrid ones or even manually keep a tab of this vital information on spreadsheets. In addition, you can color-code calendar sections, adding reminders and notifications against events, targets, and deadlines. A compelling payroll calendar would emphasize cut-off dates for salary computation, reimbursements, and incentives throughout the year and, in turn, lessen the chaos and arbitrariness that would have been present otherwise. Depending on your platform of choice, you may also be able to notify your employees when they can anticipate their salaries and any past arrears.

   Also Read: What Are The Payroll Myths? Busting The Most Common Outsourcing Misconceptions

5. Gather valuable Insights and Feedback

   Sure, you have done a great job with payroll management with that new calendar, HR L&D session, and exhibited policies for transparency. But that's just what you're assuming. Well, in all possibilities, you may be right. But, planning, strategizing, developing, and executing top-notch payroll management techniques may still have a leak that needs to be plugged. The only way to find out is through constant evaluation. Check the statistics and ask your staff to give you honest feedback. Sometimes, the gap lies in mere comprehension of policies and procedures. You may have the best of these in place, but if your employees haven't a clue, of what good is it then? Conducting periodic reviews and surveys can help you understand if and where these gaps exist. Your staff will thank you for this gesture because it displays empathy and concern. It proves you, as an employer, understand how essential and delicate payroll issues are and do all you can to ensure clarity, transparency, and proper management. Standing by such values helps garner loyalty and dedication from your employees. Most of your staff will willingly oblige, and participation in such topics is always 100% because it impacts everyone. This kind of participation can be clubbed with other team-building activities for a double impact.

6. Consider outsourcing the Payroll Process

   Your time is your most valuable resource. If you are experiencing roadblocks or frequent lapses concerning payroll duties, it’s better to outsource this function. This can get some load off your shoulders while providing you with the opportunity to concentrate on other essential core tasks. Outsourcing payroll comes in numerous shapes and sizes. Payroll service providers allow you to be a part of the process and still be in control of everything through payroll software, offering varying degrees of control. Payroll service providers are experts at what they do. They understand state laws and taxation. They’re adept at these computations and ensure you adhere to the law with sufficient audit trails to back you. If you’ve been experiencing mishaps or stress in areas concerning payroll, maybe it’s time you consider outsourcing this task.

7. Automate only certain or all of your Payroll Service Functions

   We live in a digital era, and IoT has enabled the automation of most business process functions. Instead of outsourcing payroll processes, you can just manage your own in-house software. The idea is to reduce the manual load, increase efficiency, and improve payroll processing TATs through one automated platform. HR Suites and enterprise solutions are advanced solutions that are the automated equivalent of outsourcing functions to an external HR service provider. Automated payroll can be calibrated as per your location, history, state laws, regulatory bodies, etc. They automate employee attendance and calculate overtime payments depending on variable slabs and increment levels as defined by the admin. It is undeniably faster and easier to have all this information pre-calculated and organized systematically where your team can access these to authorize payments instantly or as required.

8. Documenting the Payroll Process

   Although it may appear as an unnecessary effort and additional cost, you must have all your information regarding payroll available and accessible for audits or any unforeseen circumstances. Apart from maintaining crisp records for auditing purposes, this practice helps track essential information that can be studied and analyzed for better planning. It allows HR to conduct regular reviews, clarify their positions, reinforce responsibilities, and plug all areas of concern. Sometimes, a company's leadership undergoes a drastic change, and resolving issues can become a massive task if proper documentation is not maintained from the beginning. It's a good idea to have all past payroll records stretching beyond employee separation and change of management. However, if you're struggling to backtrack data, at least insist on the last decade's worth of trails, which is the bare minimum.

   

Exela HR Solutions is a world leader in delivering end-to-end HR services, from recruitment and global payroll processing to HRBP services. We’re here for all your payroll needs. Whether you’re a startup, an MNC, or a conglomerate, we have HR software and solutions for businesses of all types and sizes. So, get in touch with us today if you need help with payroll or any other HR function.

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.

More often than not, payroll is not given the due attention it demands, hampering employee experience and creating discomfort in the long run. Improper payroll management might also result in heavy compliance-associated penalties. All these challenges can be easily tackled with efficient payroll outsourcing services. However, there are numerous myths associated with payroll outsourcing services. This blog helps you bust some common myths associated with payroll outsourcing. But before we begin, let's get our basics clear on payroll outsourcing.

What is payroll? And how can businesses benefit by outsourcing their payroll function?

Payroll is the compensation that a business must pay to its employees on a specific date, for services offered by them for a certain period. Traditionally, a human resource team or the accounting department would be entrusted with these responsibilities. However, many businesses are now outsourcing their payroll functions to save time and money. Outsourcing payroll means essentially hiring an external party to manage all or selected payroll-related functions of the company.

Time spent on outsourcing is time well spent - Robert Halff 

Outsourcing payroll processes can save businesses a lot of time and effort when it comes to screening, hiring, and managing their employees. For example, hiring an outsourcing service provider means no need to worry about heavy IRS penalties. Payroll outsourcing service providers are well equipped with the latest laws and regulations, so you don't have to stress about them making wrong decisions. Additionally, outsourcing service providers store data securely, helping prevent fraud and identity theft.

Now, let's debunk some myths and misconceptions surrounding payroll outsourcing:

Misconception 1: Risks from Exposure to Sensitive Company Information

Data protection is a significant concern in today's world. Losing personal employee information can cause substantial harm to any company. Unfortunately, most companies are worried they may be putting crucial company information at stake by hiring a payroll process outsourcing service. This is one of the biggest myths. Generally, payroll outsourcing providers sign a data security agreement with the company to reassure them of their safety and strong privacy guidelines to protect their clients.

Violating this agreement can incur heavy losses for the payroll company, putting their reputation at stake and the company at risk of losing sensitive information of their employees. In addition, data security measures, multiple server locations, and backup facilities offer added protection against any potential payroll fraud.

Misconception 2: The Employer Loses Control over Payroll Management

Another common misconception is that by outsourcing payroll solutions, companies will lose administrative control over their payroll processes. On the contrary, a payroll outsourcing firm delivers customized and tailor-made solutions to its client’s distinct business requirements. So, if you still want to correspond the cheques yourself, you can.

Furthermore, payroll service providers assign a reliable business manager to your account who delivers every segment information segment you need, just like your in-house payroll manager. As a result, the payroll processing and outsourcing procedure are entirely transparent, and you stay in complete control of the payroll processes that count most to you.

Misconception 3: Transitioning to Payroll Processing and Outsourcing is a Nightmare

Businesses are worried that payroll processing and outsourcing will pose challenges and disturbances to their existing processes. Nevertheless, this is an absolute myth. A third-party payroll service provider guarantees that transitioning to payroll process outsourcing is smooth and hassle-free. In addition, they have an experienced payroll administrator allocated for each client to ensure the process is effortless. Moving payroll to a third party may seem daunting, but it is not! Moreover, outsourcing the payroll function offers long-term advantages such as streamlined functionality with cloud computing, additional time to focus on core business actions, improved compliance, cost-effectiveness, etc.

Payroll is not what we do. It is the thing that drives our business. - Steve Wynn 

Misconception 4: Payroll Outsourcing is Not for Small Businesses

This has to be a myth because small businesses benefit the most from payroll outsourcing. Small companies have limited time, money, and resources to invest in payroll processing and related tasks. Hiring an outsourcing company or firm to provide these services can help small businesses save money and time that they can devote to developing their business. In addition, payroll outsourcing is a guaranteed solution for small and medium enterprises to avoid IRS penalties and ensure employee data security and compliance.

Misconception 5: Payroll Outsourcing Costs More than In-House Payroll Management

This is not true. A business enterprise can save a lot of money by outsourcing its payroll tasks to an outsourcing firm. Businesses do not realize that the actual expenditure of processing payroll in-house is not restricted to the salaries of in-house payroll processing staff but also involves a host of ancillary costs. The costs implicated in managing payroll in-house apply to:

• Employees and all associated expenses, including recruitment, hiring, training, etc.
• IT support
• Payroll software
• Security

A payroll outsourcing provider can help you save payroll-affiliated staff costs, time and money spent on keeping pace with rapidly-changing legislation, costs of running and holding a payroll software system, and expenses incurred on IT support.

Furthermore, payroll outsourcing solutions allow you to concentrate your energy and resources on core business activities, offering value and cost savings while assuring compliance.

Also Read: Payroll Trends to Keep You Ahead of the Curve in 2022

Misconception 6: Outsourcing Payroll Has a Negative Impact on Employee Experience

Companies believe outsourcing payroll solutions will build barriers between themselves and their staff and will have a negative impact on employees. The reality is the opposite of this!

Third-party payroll service providers deliver a personalized experience to employees by providing them access to employee self-service (ESS) software to access their payroll data. This software allows employees to have secure access to their payroll data, correct investment declarations, apply for leaves, download pay slips, and more.

Besides the above-mentioned advantages, employees can rest assured that they will receive their payroll accurately and on time, increasing their morale and productivity.

We rise by lifting others - Ralph Ingersoll

Finally, not every company may need payroll outsourcing services – for example, businesses satisfied with in-house payroll professionals who get the job done year after year. On the other hand, small businesses and start-ups should intensely explore outsourcing as a great approach to drive their workforce toward attaining greater objectives quickly and efficiently.

Dreams don't work unless you do

Smaller businesses can be satisfied immensely by a payroll outsourcing provider. It can help them scale, stay compliant, and save on resources that can be channeled to different core functions of the business. If you are the owner of a small business considering outsourcing payroll, you do not have to take a substantial chance all at once. Instead, you may gradually test whether it is suitable for you or not. Begin with simple "compliance" outsourcing. Then, if you like the service, you may outsource "tax services." This way, you can determine whether or not the collaboration works. Once you've gained confidence, you'll be able to outsource the complete payroll function.

It's all about... Having the right payroll outsourcing, with the right abilities, in the right place, at the right time.

Exela HR Solutions is a global pioneer in providing end-to-end human resource outsourcing services, including recruiting process outsourcing and global payroll processing. Exela’s skilled experts offer instant access to all the solutions you require for your business at a fraction of the cost. Contact us today to learn more about our services.

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.

Many modern businesses, especially after the pandemic, have had a chaotic payroll function in their business. They have been forced to spend a lot of capital and resources to maintain this function of their business, but the return on investment has often been close to nothing. It’s like running on the treadmill at a fairly high speed – you can run comfortably for a few minutes but after a certain point, it is challenging to keep going at the same pace. Businesses grow, growth adds people, and people add complexities to payroll – this is a simple, conclusive truth. Businesses that can afford to keep burning valuable resources can keep doing it only for so long before the “law of diminishing returns” kicks in.

Eventually, this unseen phenomenon starts eating into the profit margin of the business which results in either one of the three outcomes.

• Severe budget cuts in other important departments of the business
• Declaring bankruptcy
• Outsourcing payroll to third party companies

Smart businesses choose the third option. Even smarter businesses choose the third option long before entering a situation where they are forced to choose it.

Big Benefits Modern Businesses Enjoy After Outsourcing Payroll to 3rd Party Companies

• Positive Opportunity Cost:

This is one of the biggest benefits that businesses experience after choosing a global payroll processing and outsourcing company. All costs related to running a payroll department internally become available to the company that can then be redeployed further into the revenue-generating departments of the business. Departments like research and development, marketing, sales, customer service, etc., where the return on investment is extremely high that actually helps contribute to the growth of the business.

• Perfect Compliance:

Global payroll processing and outsourcing companies have a team of expert lawyers, compliance officers, and auditors to make sure you adhere to even the tiniest compliance law there is out there. With guidelines changing so frequently nowadays, it becomes tough for HR generalists, who are usually involved in processing payroll, to keep up with these changing compliance laws and guidelines. Moreover, if your business gets caught not complying, regulatory authorities impose hefty fines for such infractions, even if it was an honest mistake. For most businesses, paying just one or two such fines can cause months or even years of a setback in their progress – possibly a shutdown.

• Data Security:

Payroll data is amongst the most sensitive data a company can hold. Therefore, the protection of this data is vital. According to a recent study by RedTeam Security, 56% of all payroll data breach incidents occurred due to internal employees who had unrestricted access to this sensitive data. Global payroll processing and outsourcing companies invest heavily in this area to build the necessary technological infrastructure to store and manage such data. However, investing this heavily in a low-ROI arm of the business is not feasible for most businesses, making it even more attractive to get the best security there is for your data, at a fraction of the cost. Next time you’re in the market for global or local payroll processing, make sure you ask these questions to your payroll outsourcing company:

• Any accreditations your infrastructure and processes are compliant with?
• Any locations where data is hosted?
• Who has permissionless authority to access our data?
• How does data backup occur?
• How is the data stored on your servers and transmitted to us?
• Any on-site security measures where the servers are kept?
• Any antivirus/firewalls used to defend against real-time attacks?
• Any protocols, in the unlikely event of a breach?

Also read: Payroll Trends to Keep You Ahead of the Curve in 2022

Highly Improved Payroll Processing Timelines Globally

From the employee’s perspective, the biggest demotivating experience they can have while working for an employer is not getting paid on time. This gives birth to a vicious circle and increases turnover significantly – another added cost.

Global payroll processing and outsourcing companies never have this problem because of two big reasons:

• Robust technological infrastructure to process high volumes of payroll that is maintained extremely meticulously.
• Almost all the payroll sub-functions are fully or partially automated using varying degrees of robotic process automation.

Therefore, businesses that choose to outsource their payroll to a different company get to experience world-class service without ever having to spend a dime on building the tech in-house from scratch.

Accuracy and Employee Satisfaction

The last group of people who are going to be affected by how your business does payroll is your employees. Their feedback will matter the most when deciding whether or not your payroll system works. Here’s why.

Accuracy and timely pay have a direct correlation with employee satisfaction. As long as you, as an employer, are able to get these two things right consistently month-over-month or week-over-week, your employees will not care how you get it done.

Tax season has always been the biggest test of a payroll system. Sit back and truly reflect for a few minutes on how your payroll team has been performing for the last few tax seasons. Do they get overwhelmed? Are they short-staffed? Were you always nervous about needing to call in reinforcements (freelancers/contract workers) at any time? How was the reaction post-tax season? Were there too many employees complaining about inaccurate filings, deductions, or calculations immediately after tax season? Did your staff size grow over the last few years? How has that affected the payroll system during the tax season?

If the answers to those questions do not look satisfying to you, it is time you try something new: global payroll processing and outsourcing companies.

49% Off After Choosing a Global Payroll Processing & Outsourcing Company?

In 2007, John Keegan, who was the sales and marketing director of Capita at the time, gave invaluable insight on payroll and his perspective on the matter that was derived from years of raw experience.

He gave an example of one of his clients that pulled down their overhead costs by a whopping 49% in just 4 years by outsourcing all of their payroll activities. He further added, “This firm had 10,000 employees, four different payroll departments, and used three different pieces of software. If we hadn’t saved them upwards of 30%, I’d have been disappointed.”

Even for a big global payroll processing and outsourcing company, this level of reduction in overhead was completely unheard of at that time. Addressing other business owners that did not have thousands of employees on their payroll, he had something else to say.

“95% of firms outsource because they believe it will save them money. Although true, sometimes it takes the benefits a bit longer to reach your business. Businesses may never see a single dollar in cost savings until 18 months after outsourcing their payroll to global processing companies. It is almost never possible that your business will see cost savings from day one unless your payroll system was run extremely inefficiently prior to choosing payroll providers. It is fairly safe to say that employers can start to expect saving an average of 20% per year after an initial period of seven years.”

Recap and Conclusion:

• As the business grows with time, your ability to extract returns from your in-house payroll system starts to fall rapidly – the law of diminishing returns.
• There are huge benefits to outsourcing your payroll.
• Huge Benefit #1: Positive opportunity cost – you’d rather spend your valuable time and resources on revenue-generating arms of your business.
• Huge Benefit #2: Perfect compliance – you always stay on the right side of the law and avoid hefty fines.
• Huge Benefit #3: Data security – you get access to a powerful technological payroll infrastructure that keeps all your sensitive data safe.
• Huge Benefit #4: Employees get paid on time – you leverage today’s bleeding-edge tech like robotic process automation to get the best experience for your employees.
• Huge Benefit #5: Accuracy and employee satisfaction – tax season, the greatest predictor of a sturdy payroll system. No complaints from employees after tax season = great payroll execution.
• A bigger employee size in a company automatically translates to greater reductions in overhead costs related to payroll.
• Although, even small to medium businesses that do not have thousands of employees can benefit from choosing to partner with global payroll processing and outsourcing companies by saving an average of 20% per year.

Exela HR Solutions offers world-class payroll solutions to businesses of all sizes across different industries and geographies. We have contributed successfully to the growth strategies of multiple businesses over the course of the last few years. Our team of payroll experts comprises lawyers, compliance experts, auditors, and experienced payroll specialists that act as one cohesive unit to cater to your payroll needs 24/7.

Get on a short call with us today to learn more about our offerings.

Sources: google.com | en.wikipedia.org | reddit.com | completepayrollsolutions.com | employeebenefits.co.uk

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.