Managing payroll is a task that demands a great deal of attention and even a minor error in its processing can result in significant monetary losses for a business. Further, compliance issues, employee regulations and frequent changes in the tax laws, make payroll processing a highly challenging procedure and it can become difficult for businesses to successfully navigate through it without any problems.
Below are some of the critical challenges that small and medium businesses face while processing payroll for their employees:
- 1. Time-Consuming Process Payroll is a tedious and highly time-consuming process, even if a business is has the right technological platform to process the payroll successfully. As a result, a significant amount of time is spent on calculating wages and deductions, not to mention dealing with garnishments and levies, while also ensuring the business is in compliance with all payroll laws. For small and medium business (SMBs) owners, time is money as they constantly juggle between the operational and strategic aspects of running their business. Spending a considerable amount of their time on a recurring task like payroll, would mean struggling to find sufficient time to focus on the growth of their business.
- 2. Manual Payroll Processing Many businesses choose to manage their payroll functions internally and manually to avoid any upfront investments in high-cost platforms. However, manually entering employee data/records and doing manual calculations makes the payroll process prone to even more errors. Further, it gives rise to possible issues like duplication of records, which could lead to an employee being paid twice for the same payroll cycle and therefore can result in even bigger problems for the organization. Further, not using any form of technology platform results in process redundancies and inefficiencies which lead to wasted time and money, as well as frustrated staff members.
- 3. Keeping Up with Regulatory Changes Payroll regulations can be dynamic and are updated regularly by the government. In order to avoid payroll issues that occur because of regulatory changes, business owners should always stay updated on any changes occurring in their particular state or on a federal level that may impact them.
- 4. Payroll Fraud According to The Association of Certified Fraud Examiners (ACFE), payroll fraud happens in 27% of all businesses, and occurs nearly twice as often (14.2%) in small organizations with less than 100 employees than it does in larger ones (7.6%). This fraud is committed in several forms such as falsified wages and commissions, faking injuries for the insurance claims or having ghost employees. Therefore, it becomes critical for business owners to implement appropriate procedures and validations to avoid such fraud from occurring in their organization. All of these kinds of activities takes away the focus of the business owner from the growth of their business.
For every business, whether small, medium or large, payroll processing is a considerable expense and ensuring that it is streamlined is essential. Outsourcing is one solution to help businesses overcome these major challenges. Allowing your company’s payroll process to be handled by payroll experts will result in a more efficient process for your business while also bringing about a peace of mind over the compliance aspect of that part of your business.
We at Quatrro, regardless of a company’s size, are proud to provide flexible payroll services that streamline the payroll process, improve productivity of our client’s current staff and simplify administrative tasks so that they can focus on more strategic activities required to grow their business.