Payroll administration is a tricky business. Usually, there’s a lot riding on administrators’ abilities to accurately collect, organise and submit payroll data. It’s also an aspect of business operations that can prove expensive if you’re not focused on delivering value and streamlining the processes involved.
To help you master your payroll administration, we’ve compiled a quick guide, containing our top ten tips for effective payroll management.
What is payroll administration?
Before we get stuck into our top 10 payroll administration tips, we thought it would be a good idea to briefly explain what payroll administration is. Essentially, payroll administration covers all of the tasks related to organising and executing the payment of employees. While this may sound like a relatively narrow purview, it’s actually rather broad.
Payroll administration includes ensuring taxes have been deducted accurately, calculating sick and maternity pay, managing payslip distribution, resolving employee enquiries and reporting to HMRC. It’s complex, challenging and difficult to get right.
What makes a good payroll administrator?
Being an effective payroll administrator requires a wide range of skills, an eye for detail and considerable expertise. Generally, you’ll need a solid understanding of financial administration and the digital skills to work with spreadsheets and other financial software.
Many businesses offer administrator training, ensuring you’re up-to-date when you join. However, high-performing administrators also take an interest in their own development. That means keeping abreast of the latest trends in payroll, understanding new technologies and seeking out advice and expertise that can help you build your knowledge base and progress in your career.
1. Build on “clean” foundations
Life is so much easier for administrators when they build payroll operations on solid foundations. This advice can be applied to various aspects of payroll, including the systems you use and the processes you implement, but it’s especially significant when it comes to employee data. Building on “clean” foundations means ensuring employee data is accurate in the first instance.
A lot of this comes down to your onboarding process. Data verification should be built into the onboarding process, giving administrators an opportunity to make sure they have all the employee data they need and that it’s all completely accurate. If you discover a mistake later on, going back and trying to find the original error in your records is an arduous process and often requires a labour-intensive and time-consuming audit. Build a series of checks into the onboarding process and you can save yourself a lot of unnecessary work and stress.
2. Put verification processes in place
However, checks and balances shouldn’t just be employed in the onboarding period. They’re useful at every stage of the payroll process. This is particularly true for timesheets. When dealing with a large number of employees, it’s easy to miss inconsistencies and mistakes. There’s an enormous amount of information before you and you can’t check every single figure.
Implementing a system that groups employees according to role and then compares their timesheet data against their expected work hours and pay scale allows you to flag discrepancies more easily. If your software designers normally work 35 hours a week but one of them has logged 50, the system will notify you, ensuring you’re able to make the required enquiries and ascertain whether the timesheet is correct. Preventative measures are far more efficient (and cost-effective) than trying to fix things retrospectively.
3. Educate employees
Employees play an important role in ensuring payroll operations run smoothly. If they’re consistently submitting the wrong documents, at the wrong time or with inaccurate data, it makes the administrator’s job that much harder. Ultimately, it’s the administrator’s responsibility to provide resources to employees that walk them through the processes and help them complete their paperwork properly.
This is particularly relevant in areas such as overtime and expenses, where things can get complicated. We recommend creating a payroll package for all employees that can be accessed via the company intranet or other, similar portal. Employees can then be directed towards these guides should they have problems or doubts.
4. Consider electronic payslips
A substantial number of businesses are now moving away from traditional paper payslips and embracing electronic payslips. Sometimes referred to as e-payslips or digital payslips, electronic payslips benefit payroll administrators in several different ways.
Along with being cheaper to produce and distribute, they’re far less time-intensive, allowing administrators to focus on more valuable work. The fact that they’re distributed and stored digitally also means that employees can’t lose or misplace them, reducing the amount of enquiries administrators have to handle as employees attempt to find or replace their slips. Perhaps most importantly, they allow for more secure and reliable record keeping. There’s no more digging through piles of paperwork trying to find a single slip and all information can be accessed immediately, from any device, at any time.
If you would like to find out more about electronic payslips[1] , take a look at our dedicated guide to making the switch to digital.
5. Request feedback from the employer and employees
When you focus on a particular aspect of business operations, you tend to see the entire organisation through the lens of that particular speciality. This often leads to a “can’t see the forest for the trees” situation, in which you’re overly focused on what works for payroll and not the business as a whole.
Requesting feedback from your employer and employees is a great way of getting a new perspective on things and identifying issues with the system you never knew existed. Recognising problems in this way gives you a head start on resolving them, preventing them from spiralling out of control or causing bigger issues further down the line. It also helps reassure employees that you’ve got their best interests at heart and that you’re working on their behalf.
6. Know your deadlines
There’s a lot riding on payroll administrators doing their job right the first time around and always hitting deadlines. Employees benefits, such as Universal Credit, can be dependent on all payroll information being submitted on time and late submission can also result in financial penalties for the company.
For this reason, it’s a good idea to keep on top of your dates. HMRC reports must be submitted by the 19th of every month but this can be affected by bank holidays and other important payroll dates. The easiest way to avoid issues is to create your own payroll calendar at the start of the year, detailing all the dates you need to know, well in advance.
7. Automate intensive processes
Technology is a payroll administrator’s best friend. In the 21st century, there’s no reason to be manually processing all of your payroll operations - it’s expensive, time-consuming and prone to errors. With the wide availability of inexpensive and efficient payroll software and outsourcing services, it makes sense to automate much of the work you’ve traditionally done by hand.
But it’s not just about using technology to make administrators’ jobs easier. Self-serve solutions can be implemented to allow employees to submit their timesheets and important information in the easiest way possible. This has the added benefit of being simpler to audit and prevents you from having to chase timesheets, as automatic reminders can be sent out to those who are late or approaching a deadline.
8. Review payroll operations regularly
It’s easy to think that you’ve perfected your organisation’s payroll operations, particularly if you’re an experienced administrator. However, payroll is always changing and your systems and processes need to reflect that. One of the best ways of ensuring you stay ahead of the game and don’t succumb to complacency is to schedule regular reviews.
While large-scale reviews will be conducted infrequently - perhaps once a year - you can use certain triggers to justify smaller reviews that focus on specific problems. For instance, if you receive a large number of employee questions that all cover the same subject area, you may want to review your employee guides or take a look at your processes to see how they can be improved. Another useful trigger is software updates. If your payroll system changes in any way, it makes sense to check that it still functions as it should and is fully integrated with companion software and systems.
9. Use a trusted source for updates on legislation
Payroll legislation moves surprisingly quickly and HMRC regularly makes tweaks to the system that can have significant repercussions on the way you collect, process and submit payroll data. Consequently, it’s important to keep up-to-date with the latest developments in the sector and to use trusted sources to keep you abreast of changes.
This could be as straightforward as subscribing to an industry newsletter but, if you truly want to be prepared, there’s a whole host of resources available to you. Seminars, conferences and webinars are all excellent ways of refreshing your knowledge and gaining a deeper understanding of where the sector is headed and what to expect in the future. They’ll also connect you to the wider payroll community, giving you access to diverse expertise and information.
10. Think about the simplest way of doing things
Our final piece of advice is to always look for ways of simplifying payroll operations. Payroll is complex enough as it is without introducing other, unnecessary complications. Whether that means implementing self-serve solutions for employees, automating certain processes or improving the way you communicate key information, just remember simplicity is key!
Next steps
Over the last decade, digital technology has dramatically altered the payroll landscape and disrupted traditional processes. Though change isn’t always welcomed by those who are accustomed to the old way of doing things, these developments can only be a good thing for payroll administrators. They make your life easier and reduce the scope for error.
Another important development is the growing popularity of payroll outsourcing services. Using their economies of scale and specialist expertise, third-party service providers are often able to perform all of your payroll operations more accurately and at a lower cost than in-house teams. Though you may be considering implementing new payroll software, it’s always a good idea to talk to payroll providers about whether they can offer a superior service at a lower cost. In many cases, they’re the sensible option for your payroll administration needs.
If you would like to find out more about Finesse’s payroll services, get in touch on 03303 201 924 or contact us using this form.