Payroll Management: 6 Signs You Need Help

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Payroll management is an integral part of any business. It involves much more than salary calculation to encompass time-tracking, payslip generation, reports generation, tax calculation, tax filing etc. By far the biggest challenge is regulatory compliance which requires the services of trained experts equipped to take the right decisions under testing circumstances.

This makes payroll a complicated and resource-intensive process that poses considerable challenges for companies. Look out for these signs if you are handing your own payroll which indicate you need help.

1. Dedicating More Time Than Necessary

The complexities of the payroll process often mean that managers and business owners end up dedicating more time to it than necessary. Since payroll is a non-core activity, managers should spend the least amount of time on it. Even so, it is not unusual to see SMBs devoting more time to payroll than to their core business activities. If this situation sounds familiar to you, it means you need to ease your payroll burden by looking outside for help.

2. Salary Problems for Employees

If your payroll operations are under stress, the earliest warnings will come not from your manager, but from disgruntled employees. Rumblings about salary delays and miscalculations among employees indicate that your payroll unit is unable to perform the task entrusted to it. What should worry you is that payroll errors on a consistent basis will likely have an impact on tax filings and compliance potentially leading to heavy penalties. It could be time to augment your resources or turn to external sources for help if you hear payroll-related rancour in the ranks.

3. Your Payroll Staff Costs are Increasing

One of the ways managements choose to alleviate payroll-related problems is through the hiring of additional staff. They could be junior- or senior-level staff depending on the requirements. But additional employee intake, overheads, subscription fees for specialised software etc. could inflate your payroll budget to the point where it starts affecting your profit centre by hampering investment in key areas. It makes sense to outsource the payroll function to bring cost efficiencies under the circumstances.

4. Your Training Costs are Increasing

Besides hiring, another way that managements react to payroll problems involves the training and upskilling of existing payroll staff. But this method only works when the problem actually lies in lack of training. Coaching or upskilling of junior-level employees may not work when what you actually need is an experienced senior hand. It will only inflate your training costs without a commensurate effect on performance, creating a vicious cycle of still more training leading to sub-optimal results.

Constant training and skills upgradation of existing employees, coupled with regular promotions, also brings the risk of creating a top-heavy payroll team. The overshooting of training budgets should be seen as a notable early indicator of a deeper malaise in payroll operations and cause for investigation.

5. You Need to Dedicate Additional Resources to the Core Business Activity

Being a resource-intensive process, payroll often takes away focus from the core business activity, with a negative fallout on growth. Companies in the growth stage with a need to focus on business expansion could make a strategic decision to outsource payroll to restore attention on the main profit generating activity. Apart from cost savings and reduced operational burden, outsourcing also brings benefits in the form of efficiency and access to expertise. It also results in the reduction of errors by a significant margin, facilitating filings and compliance.

6. You Are Venturing into New Territories

Business expansion into new territories brings with it its own set of payroll-related problems. As companies extend into new geographies, they also must contend with different payroll regulations, making it increasingly difficult for them operationally.

Companies often respond to this by adopting a hybrid approach, outsourcing some parts of the process while retaining others. But the addition of more territories complicates the architecture, increasing risk of errors, while also generating cost inefficiencies.

One way that businesses can avoid this problem is opting for a global payroll service. These services are designed to cater to global businesses across different legal environments.

Common Payroll Solutions

Learning to recognise the early warning signs of payroll trouble can help you manage your business in a better way while avoiding penal action. Some of the instruments in your toolkit you can use include hiring, purchasing a software platform, and outsourcing. Managers should have a sharp understanding of their requirements and invest for the long term to ease their payroll burden.

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