Skip to main content

Error Prevention in Payroll

Human error is one of the 3 major risks in payroll management.   Some fairly simple processes can help to reduce the risk.   And put them in writing, for easy referral.

Setting deadlines that are both realistic and practical is one of the first formal processes that should be in place. 
  • It is crucial to have open discussions with all the role players when setting deadlines, so that everybody understands what the implications of not meeting the deadlines are, as well as being committed to the process. 
  • A key success factor is that the contributors are aware that they need to inform the payroll department timeously if the can't hit a deadline, so that alternative arrangements can be made.
It is amazing how many people think that its OK if they miss a deadline once, not being aware that if there are 20 deadline contributors who do that once each year, well, you can do the math....

Standard formats both reduce risk, and make processing easier.   Every form should have the critical information in the same place, eg Employee Number, Name and document purpose, in order for the payroll department to easily see who and what needs to be processed.

Controls that confirm that all the data is processed correctly are also necessary.   Many companies moved from batch processing to "live" online models, but didn't carry over the controls that made batch processing low risk.   Input data should be checked by somebody other than the data capturer, too.

Back ups in a payroll department should be taken at regular intervals.   At least daily, and more often when there is a heavy capturing load.   In larger organisations, backups are often managed by the IT department, and done at regular times, but it makes sense to make additional ones in the payroll department, during salaries/wages processing.   And do check that the backups are recoverable.   While this all seems obvious, we regularly have to assist clients who are not able to recover their most recent backup, for various reasons.

Balancing monthly, quarterly, year to date, in a structured way, can also help prevent year end pressure.   One of the challenges of keeping a payroll constantly in balance goes back to the first point around deadlines.  A balanced payroll that needs to have a last minute change can create problems, because processes need to be redone, and this is when errors creep in.   In order to assist with this, we have placed a payroll shield in our software, under the control of the Payroll Administrator (PA), which allows continued processing, particularly useful in an integrated Payroll and HR system, with no impact on the completed payroll before EFTs, unless the PA unshields.   

Sign off by line management, supervisors and the Payroll Administrator/Financial Manager are also requirements, as the infrastructure of regular process goes a long way to adding a level of care and focus to the work being done.   Its just human nature to be more careful when you know you are going to be checked.

It would be interesting to know what other processes you have put in place to minimise errors.

Payroll Software
Accsys Website Contact Sheet
Payroll Qualification

Popular posts from this blog

3 things to do BEFORE you resign

or sign a new contract…
1.Confirm your notice period ·A lot of companies allow 30 days from date of resignation, but many ask for a calendar month
2.Check your restraints ·If you are joining a competitor ·If you are joining a client
3.Find out when your last payment will be transferred ·Companies have been burned by paying over on the 25th, and people not returning, so they may delay payment transfer until the last official working day, or even the first day of the following month.  You may need to make special arrangements regarding debit orders ….
Both your current company and your new one deserve to be fairly treated.   Knowledge of the policies makes this possible.
Even if the policies don’t make sense to you, you agreed to them when you signed your contract.
HR managers will tell you how many great working relationships are damaged because people don’t follow policy when resigning. It’s worth taking the time for many good reasons.  Building a solid career can depend just as much on how you …

Favourite Words

Shambolic – it simply sounds better to me than chaotic.. Do lots of people have favourite words or just a few of us nerds? As everybody is starting to think holidays (or maybe you prefer to vacation), it seemed a good time for a different type of blog. Have you noticed how many words with pleasant associations sound more attractive than those that describe the negative. Watching a TV quiz show the other night made me wonder. The contestant hated bulbous and gusset! There have always been some words that appeal to me, triskaidekaphobia being one. I now know that I had the meaning wrong! I thought it meant fear of Friday the 13th, but it is simply a fear of the number 13, so how does paraskevidekatriaphobia grab you? That is the real word for fear of Friday the 13th. Love it! Now I prefer rural to bucolic, but Robert Beard (see below) selected the latter as one of his favourites. Effervescent is a gorgeous word, so descriptive and onomatopoeic while ethereal makes me think of gossamer and fairie…

Resignation - keep building relationships

Resignation – avoid burning those bridges It has been a great pleasure working with a colleague like you. Now, you are off to your next big challenge! Good luck and farewell!
Isn’t that what we all want to hear when we leave?  We were appreciated and we will be missed.
The need for all parties to maintain professional conduct in the event of resignation is critical, particularly now when we are working within an unsettled socio-economic climate. Employees should avoid damaging relationships, and employers need to adopt a neutral approach and ensure that there are policies and processes that enable the separation to be objectively handled.  For example: ·A formal resignation letter is required·A formal acceptance of resignation is issued confirming any special conditions·An exit interview takes place·Handovers are planned and executed
Our HR team advise those who resign their position to adhere to a few golden rules. Failure to do so could harm whatever bonds have been formed at the workpla…