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5 Common Growth Issues With Payroll Management

Posted by Leslie Ruhland on Apr 6, 2018 4:22:27 PM
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As businesses grow they often find that their existing processes become strained to accommodate that growth. One of the most common processes to feel that strain is the payroll management process.


When most businesses are in their beginning stages, payroll management is typically a fairly simple task. Often, depending on the size of the start-up, it can be the owner managing payroll. The bookkeeping is usually straightforward, and payroll consisted of the owner and maybe just a few employees.

And the payroll process doesn't take up much valuable time, which can be spent on growth and expansion. Eventually, the time invested in growing the business pays off and the organization finds that, not only have sales increased, but the staff has also increased to meet the demands of a growing business.

And, along the way, a once simple payroll management process has become a beast that threatens to overwhelm the payroll staff.

A Payroll Management Tipping Point

It is true that there comes a point where the benefits of managing your own payroll start to become outweighed by the problems and strain on resources.

The Law of Diminishing Returns states that,

"there is a level where profits and benefits gained is less than the amount of money or energy invested." 

In other words, an organization can grow so large and have to spread its support personnel so thin that the business growth starts to plateau. In fact, as a business owner, or payroll manager, you have probably experienced all of this already.

Your Payroll Management Process Has Limits

One survey found that over 50 percent of organizations admitted that they could improve their payroll process. However, most of the improvements needed were indicative of a lack of sufficient staff. They reported common payroll errors such as payroll complianceincorrect tax withholding, and over or under payments.

Payroll software can help to make HR, payroll, and employee data to be less overwhelming. However, data storage and processes must still be well organized to avoid errors. Upgrading payroll software - or installing it for the first time - can definitely improve a company's payroll management process and potentially reduce the amount of time and staff needed for payroll.

So what are some of the common issues that indicate it's time to reconsider your current approach to payroll management?


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Common Issues With Payroll Management

As businesses grow there are problems that are typically experienced with their in-house payroll management process. Here are five of the most common issues that occur with most businesses and some suggested solutions: 

Administrative Overwhelm

A large number of businesses still have a manual payroll process. While this can be perfectly fine for a small start-up or a company with just a handful of employees, a manual payroll system requires a great deal of paperwork. And, eventually, a manual paper-based process will become an administrative burden for the HR staff as the company grows.

This administrative overwhelm can result in regular errors in data entry, as well as creating payment issues and the misapplication of rules. One relatively easy way to resolve this is with an integrated payroll software. In fact, simply investing in payroll software can be far more cost-effective than hiring additional staff to handle a growing paper-based process.

An additional solution is outsourcing payroll management. This allows some or all of the payroll and HR processes to be managed by a professional firm. And it is an option that even smaller businesses can afford.

Organizational Issues

Another issue faced by payroll managers is simply keeping all of their important payroll and employee records and information organized in an effective and accurate manner. The larger the company becomes and the more employees to keep records for, the large the problem.

Oftentimes it is can be resolved by improving the records work flow. By keeping files and documents in a central location and creating uniform filing processes, misplaced documents and filing errors can be minimized.

Gradually reducing and eliminating paper forms, time cards, and files can also be an effective solution, This, is where using a payroll software comes into play. A good program will have all of the human resources and payroll functions integrated. Either way, it is important to review, analyze and re-think the existing organizational process.

Tracking Employee Absence

Among the many tasks required with a manual payroll process, tracking employees' vacation and sick days is one that has the most potential for mistakes. The use of paper time cards or time sheets creates high potential for intentional misuse and unintentional errors.

Another task that is critical for effective planning and optimum productivity is tracking which employees are not available due to various types of absences. A truly efficient timekeeping system can eliminate most, if not all, tracking and time card problems for your payroll management process. Opting for a digital or online system can accomplish this, as can outsourcing.

Incompatible Software

While payroll software is a great option, the fact is that not all payroll programs are compatible with other existing programs in a business. Programs used for your employee profiles or records may be different from the systems used for pay and benefits. In addition, there is often a need to integrate with various other HR software systems, as well.

Finding and investing in a program that can integrate all of these functions will streamline your overall process, reduce the amount of time spent tracking and with data input, and even allow your entire department to become more efficient and cost-effective.

Compliance Issues

Accurate and timely management practices are required to maintain compliance for every business and every payroll professional. This is absolutely necessary if a business is going to avoid costly employee complaints and possible agency investigations and subsequent penalties.

The best approach to ensure compliance is an outsourced payroll solution. By outsourcing all of the critical tasks of your payroll management, organizations can mitigate the risks with the services of a reputable payroll management services provider. A third-party vendor not only manages changing compliance demands, but can potentially prove to be a more cost-effective solution, as well.

Outsourcing As a Payroll Management Solution

Payroll management is a business function that, along with taxes and other HR functions, is often outsourced. However, as a business owner or manager, it is quite common to think of "outsourcing" in terms of an "expense". One of the first questions that come to mind is usually, "What's it going to cost?"

But outsourcing can actually be a very cost-effective move, and one that can free up valuable time and resources within your organization. This means your HR team can concentrate on more important matters, such as increasing productivity and employee engagement.

It should, in fact, be viewed as an investment

In addition to resolving the common issues of payroll management, you can also be assured that the accountability and liability for compliance rests with your vendor. This can free your staff from the constant pressure of staying fully informed and compliant with the ever changing and expanding rules, regulations, and legislation.

Your Reliable Payroll Management Service

As a business owner or payroll manager you have a number of options for your payroll functions. Software that can be installed in-house, or cloud-based programs offer a good alternative. But if you really want to take full advantage of the benefits available to you, outsourcing to a provider like Accuchex can still be the best decision.

Reliability, full-service options, and reputation are the hallmarks of quality payroll service providers. If you are currently looking to invest in outsourcing you get your Free Download: Payroll Outsourcing Guide to help you make an informed decision or call Accuchex Payroll Management Services at 877-422-2824.


Topics: outsourcing payroll management, payroll compliance, payroll management company, compliance mistakes, payroll outsourcing

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