Everyone must pull together for payroll
With the Paris 2024 Olympics only a few weeks away, the men’s European Football Championships and Wimbledon just over…you get the idea – it’s a sporty summer! On that theme, it struck me that payroll is a team sport!
When it comes to payroll, connections are critical, passes need to go to hand (rugby analogy!) and so on.
Employees are delighted each month when money hits their bank accounts, but few know what goes on in the background to make that happen.
Getting accurate information from different areas of the business is imperative to the payroll team. If these stakeholders don’t realise how important their input is, the payroll process can disintegrate.
Payroll is about more than paying employees. It is interwoven with various teams in the business. The payroll process encompasses:
- getting and processing payroll information,
- paying employees; and
- including payroll costs in financial statements for statutory reporting.
Examples of the various interdependencies include the fact that:
- Several sources, including HR, Finance, employees and the Tax function, can provide payroll information.
- Emails and shared drives are two potential channels for transferring payroll data.
- Many teams, including HR, Finance, shared service centres and the Tax team, can prepare payroll information.
- The Finance department's help is used to make payroll payments.
- For statutory reporting requirements, a company's financial statements include payroll expenses. The Finance team is involved in this process.
- Updates to the payroll system are made with the IT department's help.
The fact that so many teams work on payroll processes shows how collaborative the overall process is. Given the interdependence of various teams, organisations must coordinate each team’s tasks to ensure smooth information flow. For the payroll team to experience as little pain as possible, processes should be both efficient and effective.
Common bottlenecks in the payroll process include:
manual data manipulation,
a lack of sufficient payroll documentation; and
a lack of connection between the existing HR, payroll and leave systems.
Ways to resolve these issues can include:
digitisation
outlining everyone's roles and duties in the payroll process; and
enforcing process discipline to make sure everyone agrees on payroll dates.
How businesses can ensure seamless interconnectivity across teams
For each party to understand what is expected of them and their position in the payroll process, stakeholders must be better trained on the end-to-end payroll process, with their roles and duties clearly defined.
To improve efficiency and decrease the need for manual intervention by the payroll team before processing the data they receive, stakeholders should use technology while preparing and submitting the information to payroll.
Stakeholders should implement internal controls when producing payroll data to ensure data quality and accuracy. This should cut the time the payroll team needs to verify the shared instructions or rerun the payroll.
It is vital to create a calendar with agreed deadlines for sharing payroll information. This would reduce the strain placed on payroll staff to process late payroll adjustments.
Those involved should create thorough checklists to help them when putting together payroll data. This would help ensure the information given to payroll staff is complete.
Key actions businesses can take today
1. Review your payroll process.
Review the available documentation and sources of data in the payroll process to understand which teams are involved, what they do and the value they add in the process.
2. Document the payroll process.
To guarantee no payroll item is overlooked and to instruct teams on what is expected of them, draft payroll checklists and/or process maps.
This can also ensure process continuity if important team members are absent or leave the company.
3. Analyse your processes.
Examine the payroll process to find the opportunities and gaps in each payroll activity, and to pinpoint your current pain points. This can be done by examining the payroll operating model, paying close attention to:
the personnel concerned,
the processes surrounding payroll,
the technology in use; and
the governance and controls surrounding payroll-related activities.
4. Digitise the process.
Examine how the company can use current technology to make the entire payroll process more effective. Businesses can also look at integrating their systems to reduce the need for manual data manipulation.
How can we help?
PwC works on the payrolls of Irish and international clients in many industries. We help our clients to document their payroll procedures, examine the governance and controls that surround them, and formulate plans to address any gaps and opportunities.
Coupling this with our experience in payroll compliance, we can help you to determine the steps to take to ensure an effective and efficient payroll process. That’ll mean gold medals for everyone on the team!
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