Many small business owners desire to improve their payroll processes as much as possible. This ensures that employees get paid on time and in the correct amounts. Below are some tips that will help you achieve this.
How Does The Payroll Process Work?
The payroll process is the manner in which your payroll is conducted. Most human resources departments make use of numerical notifications that will inform them of how well the system is functioning. These systems are often referred to as KPIs, or key performance indicators. KPIs are not standardized, which means that they are unique to each business. It is therefore essential to make use of a KPI which meets the specific needs of your company.
Payroll Completion Time
This is an important KPI which involves the time needed to complete payroll. Clearly, the less time it takes you to perform your payroll, the better, and this is a process which should be analyzed to determine how well you’re doing. For instance, quality systems will allow you to monitor important details such as the time which transpired between the collection of attendance data versus direct deposit distribution.
This KPI will help you determine the number of payments which are processed beyond a standard payment cycle, as well as the number of retrospective payments that are performed and any erroneous payments that need to be corrected. It will also help you ascertain the length of time which is needed to correct any mistakes that occur, and can provide insights into the number of payroll related inquiries that you receive, as well as the length of time it takes to respond. Best of all, you will be shown ways to improve by lowering the money and time that is spend performing payroll, which keeps more money in your pocket.
This is a critical KPI which will inform you of the total cost of performing payroll for the company. Having this data on hand and evaluating it will quickly allow you to find ways to make payroll less costly. To determine the total cost involved with performing payroll, you will need to know every facet of the process, which includes the amount staff members earn for compiling time cards, the accounting costs, and the amount spent on IT.
The metrics you use will be dependent on what you need. For instance, if you want to know the cost of payroll over specific time spans, you would add the total cost for each period. If you want to know the payroll cost for each employee, then you would take the total expenses involved with payroll and then divide it with the number of employees for which payroll was performed. You can also review payroll costs in the form of percentages if you divide the total expenses by the total revenue. You will also need to consider overtime, as it is more expensive to you as an employer than standard wages.