Why is getting payroll right so important?

It’s not hard to imagine the reverberating consequences of getting payroll wrong. Employees will start to hear alarm bells or will question the professionalism of the company. They may believe that the company is in financial dire straits or they will resent the delayed pay. If you make more than one payroll mistake, expect to see members of staff leaving for competitor companies.

Fewer processes are as effective as outsourcing payroll because manual, in-house payroll management presents so many opportunities for it all to go wrong.

And we haven’t even mentioned yet the potential legal ramifications of messing up your payroll taxes. It’s not pretty.

Incentive Pay

Bonuses, raises, or commissions reward employees for a job well done. They act as incentives to develop as employees and get great results for the business; it also increases loyalty to the brand. A rewards structure often gets the most from employees. But it only works if you get your payroll right. Neglect to pay their dues and your incentive pay system crumbles and is replaced by complacent workers.

Reducing Expenditure

Upgrading your payroll system always helps reduce the company’s expenditure. This may mean outsourcing payroll services or using the right online software to improve accuracy. Effectively, you need to chuck manual processes out of the window – they don’t work well, unless you have only a couple of employees. Manual processes are heavy time-consumers and they cost businesses money.

Not only does outsourcing take a load off your company, it guarantees higher levels of accuracy and takes away some of the responsibility.

Lower Tax Bills

Late or incorrect tax filings spell t-r-o-u-b-l-e. Most companies suffer from this at least a few times a year. Usually, this is down to failings in the manual process or companies being ignorant of tax codes or changes in regulation. Expect to face heavy fines or legal action, if you make a mistake.

You can save yourself this hassle though by reforming your payroll service.

Overpayment of Employees

Ah, this opens up a can of worms. Most likely, if you’ve made a slip-up and identify it quickly, you can recover your money. Although the employee may be less than gracious about it. Things do get more complicated if you’ve consistently paid for a long period of time; it may be an amount that the member of staff barely notices. You will struggle to recover these funds. You can’t just expect the employee to cough up for your mistakes.

Unless it’s a staggering sum and a one-off payment, there may be bad feelings and legal action. Which will cost you in legal fees, as well as in financial losses. Underpayment is also difficult to handle. Although you may be able to repay your employee quickly, their trust in your company will be shaken. People often depend heavily on that pay cheque coming through, and they may have families to support.