As a small business owner, it’s challenging to juggle all the hats you’re required to wear to manage all your business functions. Payroll management is critical business function that requires dedicated attention, and as your business grows, it can be difficult to keep up with the growing responsibility.
Challenges with payroll accuracy and compliance quickly add up when paired with a legacy management solution. Manual data entry, lack of guidance on compliance regulations, inaccurate and/or late tax reporting and payroll processing are serious risks associated with older payroll solutions. The longer you continue to manage payroll without a proper structure or strategy, the more you risk penalties, fees, valuable time and employee dissatisfaction.
Like all other business aspects – and as the name indicates – digital transformation has transformed how payroll data is handled and how tasks are performed. This article examines how technology has eliminated repetitive tasks, allowing you or your designated staff to operate as an overseer without completely relinquishing the connection to the function. I’ll also explain how adopting a digital solution can improve forecasting and better position your business for growth in the future.
More accuracy and confidence in less time
Absolute accuracy in payroll is always the aim throughout every pay period. The one aspect of the payroll process over which a digital solution gives the greatest control is the accuracy of master data, which is an essential key performance indicator (KPI).
With a digital solution, errors from manual data entry are eliminated through automation. You upload hourly pay or salary information only once upon employee hire. The software then creates and prints payslips, P60s and payroll reports from one source of payroll data. New employees are automatically assessed as they are added to the system to ensure compliance and accuracy. Legislative changes are also updated into the software and applied to your payroll data through automation, so there’s never a lapse.
In-house software typically offers the most flexibility and return on investment for small businesses. Not only is in-house software cost-effective, it allows you to protect wage and salary information and maintain control over payroll processing to easily handle last-minute changes.
You or your designated staff can digitally create professional, secure, accurate and compliant payslips on time for every pay period. It’s also easier to track absences, attachments, bonuses, expenses, holiday pay, hourly payments, National Insurance, overtime, payroll year-end, pensions, and salaries.
Between advances in payroll automation and better integrations with accounting software, you have a better chance than ever before of maintaining accurate master data. A high degree of inaccuracy, therefore, signals an issue somewhere that can and should be fixed.
Turnover costs and payroll forecasting
Knowing the total, average and per position cost of turnover is key to managing your staff. This includes the total costs of separation, vacancy, recruitment and onboarding. Some positions are naturally easier to fill, which could result in lower turnover costs. However, some of those quickly filled jobs could require a good deal of training, which would raise the overall cost of having to replace a lost employee.
The key insights needed here are from data gathered from positions that take longer to fill. Between the time an employee leaves one of these roles and the time another person is hired and trained, there can be considerable costs incurred in the form of staff and resources borrowed from other roles and departments to compensate for the missing employee. Again, this impacts the performance and satisfaction of those people in their primary roles. Understanding how those costs add up and what they are can help small-business owners plan for unexpected or challenging turnovers.
Through powerful analytics, you can quickly pinpoint costly discrepancies in tax reporting, avoidable non-compliance fees, opportunities to save with part-time staff support instead of full-time and other ways the function can positively impact your bottom line.
The future of payroll
As data technology continues in ways we haven’t even imagined yet, another benefit of adopting a cloud-connected payroll solution is you’ll have laid down the foundation required to take easily advantage of those future implications. Beyond making the tedious tasks smoother, Todd Black, Sage Global Director of Product Marketing for People & Payroll expects businesses to find ways to use data technology to both educate and engage their staff about payroll tax activities. “Businesses will use more modern collaboration to address things like this. This year, we’ll see more of a focus on this part of the employee experience to help employees stay aware of these types of changes and what they mean without the need for additional staff to answer questions,” Black predicts. “Automation, AI, and other data intelligence will add new layers of self-service and how companies communicate payroll tax updates in a way that’s easily digestible.”
In summary, from software-as-a-service (SaaS) analytics capabilities to cognitive analytics reports and beyond, small businesses are digitising their payroll management systems to centralise the employee data set first, then build out solution functionality based on compatibility with the central database. The ability to integrate payroll with other business functions like payments or accounting is an added layer of productivity and accuracy. From here, small businesses that adopt the payroll technology of today can expect to blaze through the roadblocks of payroll management today and continue to lay the groundwork for easier payroll in the future.
This article comes courtesy of Steve Watmore, product management lead at Sage, the business management software solutions provider.