Why Complex Payroll Processes Require Flexible Solutions

The payroll process is simple — said no one ever. It seems like a procedure that is repeated every week, two weeks, or month should be pretty straightforward. Yet, for most small businesses it’s still a detailed, time-consuming, and sometimes painful process that involves accurately tracking variances in hours, pay rates and taxes.

 

And for organizations with hundreds of employees and complex payroll processes, the procedure is exponentially more complicated and with a higher risk of error. Those errors negatively impact businesses internally and externally. That’s why those organizations need sophisticated hr software solutions designed to meet their more challenging payroll problems.

 

From Common to Complex Payroll Issues

One in three businesses makes payroll errors. The most frequent mistakes include misclassifying employees, paying the wrong amount, and not keeping accurate payroll records. These mistakes affect not only employees but also the business. When a paycheck has the wrong amount or is late, fixing the problem requires costly rework. Even then, if may be impossible to restore confidence among employees that this was a one-time issue. 

 

Payroll problems can also occur when a business files payroll taxes late, or has errors on a tax form. Businesses can end up being fined penalties from 2% - 10% of total payroll  because of mistakes. What’s more, payroll errors can result in lawsuits.

 

Errors can occur more frequently when a business has additional complexities in the payroll process, such as: 

 

  • Multiple Federal IDs, such as by business unit, geography, or acquisition (i.e. retail employees who may work in different store locations with different FEINs) 

  • Employees who work in multiple cities or states with different tax jurisdictions, such as regional sales people

  • Nonexempt workers who work overtime are subject to federal and state standards 

  • Hourly based workers whose overtime calculations can vary with commission or bonus earnings 

  • Accounting for weighted average over time, as mandated by the DOL for employees who work multiple jobs at different rates of pay

 

  • Non-discretionary or promotional bonuses, and cost of living adjustments, which require additional tax calculations for exempt and nonexempt employees. 

  • “Regular rate of pay” calculations for employees who work overtime or shift differentials.

 

Impact of Payroll Problems: More than Potential Penalties

 

Eighty-two million U.S. workers have reportedly had errors on their paychecks. Payroll errors of any kind can affect more than an employee’s bank account. When the mistake results in an underpayment, late payment, or no payment at all it can create a financial crisis for the 58% of employees who live paycheck to paycheck. 

 

But payroll errors are more than just mere annoyances or inconveniences. Over time, they can create distrust toward the company and decrease employee engagement. In fact, nearly half of all workers say it only takes two payroll mistakes for them to start looking for a new job. 

 

And while most employers don’t mean to cause their employees financial harm or put the business at risk of fines or lawsuits, they often can’t do much to prevent issues because their payroll is so complex and they lack hr software solutions sophisticated enough to handle it. 

 

Keys to Making Complex Payroll Scenarios Easier

 

When businesses are looking for payroll software solutions, they should look for ones that improve accuracy, reduce administrative processing time, and simplify the process. Organizations that process payroll manually increase the risk of human error. The right software platform can make the payroll process easier and faster. Although a variety of software platforms are available, not all are effective for businesses that have complex payroll processes. Here’s what these organizations should look for in a payroll solution designed to those more complex needs:

 

  • Software built for the cloud. While many platforms tout “cloud computing,” not all are created with modern architecture that has the agility needed for true cloud technology. This distinction is often overlooked but critical. Platforms with native cloud-based design, such as in SyncHR’s, provide greater accessibility and security while reducing IT involvement and support. Cloud tech platforms provide the additional advantage of no lock-out times while payroll is being processed, as well as faster response time to adjust and audit changes before processing.

 

  • Ability to handle complex payroll calculations. Employees may work in different locations or states in the same pay period-- or even the same week. They may work in multiple functions within the company, at different pay rates. A payroll system must be able to consider all of the variables and accurately calculate pay rate, overtime, and state taxes. Features like location overrides make it easy to adjust for these differentials. 

 

  • Accurate calculation of projected versus actual payroll. In some industries, such as insurance, the pay for salespeople is calculated in advance, but the actual results for each employee must be reconciled weekly. SyncHR’s unique dating feature (Time Machine) simplifies this process, giving organizations the flexibility to be accurate. 

 

  • Ability to have person to position architecture. Typically, when an employee changes departments or positions, attributes related to their old job, such as cost center, state, location, etc.) are deleted. With person to position architecture, however, the data stays with that position in the org chart. This ensures payroll remains accurate, even if the organization is dynamically changing. Even better? This maintenance occurs automatically, requiring little to no administrative work from HR or Payroll.

 

Of course, none of these attributes of a payroll platform is useful if your payroll process still has errors.

 

SyncHR’s ability to provide complex calculations, effective dating, and unique people vs. position architecture results in reporting and data accuracy that is top-notch. Leaders have accurate visibility into their organizations, which enables them to make better business decisions. Payroll and HR teams know paychecks will be correct, with less manual work and fewer errors to fix.

 

Businesses no longer have to use tedious workarounds or accept the limitations of their systems. SyncHR’s people-centric platform is designed to provide agility, flexibility, and accuracy to handle even the most complex payroll processes.

Back To Resources

The SyncHR Team

The SyncHR Team

This is the team behind the articles that feature how to take the weight of People Management off your shoulders and shift your focus to business growth & culture.

Get the latest resources from SyncHR right in your inbox.

You might also like


Ready for a SyncHR demo?

Get a one-on-one demo of our platform and take your business to the next level.

Get Started

SyncHR Platform Overview

Our patented, enterprise-class technology is redefining and simplifying HCM

Learn More