If you have just upgraded your company’s payroll or own a new business that does not have a full payroll yet then there can always be errors involved in setting up a new system. While a lot of these problems might be easy to identify, fixing them is another issue entirely.
Thankfully, with the right testing techniques, it is not that hard to identify and solve these problems before they create more serious issues. Even a small payroll miscalculation could lead to somebody paying extra tax or getting paid only half of what they are owed for the last month of work that they did.
Here are some common payroll issues and ways to start fixing them.
Calculations are the core of any payroll, as well as all business operations that involve finance and accounting. Whether they are automated or done by hand, a payroll that does not calculate pay or tax properly can lead to serious issues for both your business and your employees.
Simpler calculations are easy to check, especially if they work off a spreadsheet that you can open and edit at any time. However, the more complex your payroll gets, the harder this can be especially if it was created by an entire accounting department who all worked on different parts of the system.
Something simple, like getting the right amount of hourly pay for the number of hours worked, can be fixed by simply re-writing the formula on a spreadsheet. Something like pension contributions and tax contributions can be a lot harder to figure out and may take some serious testing.
Do not hesitate to run old data through your payroll over and over again, making tweaks to see which calculations are impacted the most. If even one part of your pay stub layout is wrong, then it might seriously impact how much the system thinks your employees have earned.
If something goes wrong with your payroll system and you lose data, then you want a backup to help keep things on track. Without at least a basic backup system, it is very easy to end up having to re-create finance files from scratch if they go missing.
Do not just back up files in one place – have copies in multiple places, all named or labeled, so that you know what they are and where they are from at a glance. A mixture of digital and physical records can help a lot, but purely digital backups are also an option if you have limited space.
You want some kind of centralized, protected storage option for these files, somewhere that you can keep emergency copies in case something goes wrong. It is also not a bad idea to store copies of pay stub templates or other payroll-related spreadsheets and documents, just in case.
If a payroll system takes a long time to use, it is entirely possible to end up with accounting staff who can’t prepare enough pay stubs and payments before the payday deadline. This is not necessarily a major problem, but it can still annoy your employees and put you on shaky legal ground.
Having a more efficient payroll system is important, and you can often do this by automating anything you can. Tools like pay stub generators can make this a lot easier and can even become a core part of your accounting system if you want to speed everything up slightly.
It is not a bad idea to create pay stubs as a way of testing the generators, especially if you worry about accuracy. A good, consistent, and reliable generator can become an easy way to create pay stubs in bulk without eating up as much time or effort from your accounting experts.
Anything that delays your payments or pay stubs can be a major issue, so it is important to minimize these roadblocks as early as possible. Look at your entire payroll and see if there are any obvious bottlenecks that slow down the entire process.
It is entirely possible that a new company might not have dedicated accounting staff or it might have brand new accounting staff that have not gotten used to using a payroll system yet. This can create problems as your business grows, but most of these issues are solvable in the short term.
It is important to try and make time for your employees to learn the system before putting it out live, especially if that system is a complete change from the previous way that you used to pay employees. A lack of training and experience can increase the risk of human error, leading to even more problems.
If you are upgrading an existing payroll system, then try to avoid overhauling the parts of the system that already work. It can be tempting to redesign everything each time, but this just makes it harder to transfer skills from the old payroll to the new one, especially if the switch-over is very sudden.
There are no perfect systems, and sometimes the technical side of the payroll can fail. This includes mechanical systems, like the printer that you use to create the physical pay stubs. These are not usually caused by human error but by various faults within the system itself.
In these cases, you just have to make sure that you always have another option. Keep a second printer available just in case, do back up files constantly, ensure that the files are not stored on one single computer that could break, and do not lock the entire payroll behind a forgettable password.
If you run into problems where you can’t use your payroll correctly, either because something has broken or because it simply is not working anymore, then it is also not a bad idea to have another way of paying employees. In an emergency, a pay stub generator can work well for getting pay stubs out to them anyway.
Test your system as often as possible and be prepared for unpredictable, uncontrollable faults. Certain things will break eventually, and you simply have to remember that most of them are fixable within a few days. If you really want to be prepared, then have a backup plan just in case.