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6 Tips on Making a Good Payroll Even Better

Many companies may have the opinion that if employees are getting paid in a timely manner, then their payroll process is efficient. It may be true for some and not for others, for the simple reason that payroll processing is quite a complicated task. Much of this is due to tax-related regulations and compliance – and introducing employee benefits to the payroll makes it even more complicated. These factors can and do have a huge impact and can make things worse if more employees are hired.

What to do to make a good payroll process even better

Accurate and timely payroll processing has a big impact on employee satisfaction. Since employees look forward to promp transfers to their accounts, any delay can sour employer-employee relations. Not just that, it also causes a lot of stress and extra work for the HR/payroll department. There are ways to improve payroll activities and streamline to make them even better.

1. Make a monthly payment calendar: Since payroll can be a tedious and painstaking process, it is important for every company to set up and follow a calendar. This will reduce the burden on payroll specialists and reduce the error rate. A set calendar offers a timeline to work with and lets the specialist get the job done, and right. Experts recommend working backward with the net payment date as the starting point and working backward. Inputting all the required steps and the cut-off date for submissions help in estimating how much time each step takes. This schedule should be shared with all the department heads and stakeholders.

2. Conduct regular audits: Even in a well-run payroll department, there could be occasional complaints. If more than 2 or 3 occur in a short period, then an audit of the process should be done. The quickest way to figure out what the problems are and find a fix is to do a workflow analysis. A good audit would check out if all the processes are working as intended, salary software should be checked to see if it integrated properly with all other hr tools.  

3. Stay up to date on payroll tax-related policies: The IT department and related government agencies are usually strict in enforcing policies pertaining to payroll. Besides understanding what your company should do regarding tax compliance, it is also important to read up and be aware of changes in tax policies and their impact on your company and employees. Since government agencies declare impending deadlines, marking it on the calendar will help in meeting reporting requirements while ensuring that records are also updated. Putting one person on the payroll team in charge of finding out and compiling this type of information can make a huge difference. If all of this seems a bit daunting, it may not be a bad idea to outsource payroll activities.

4. Keep payroll policies transparent: Quite a few problems occur when payroll and related topics are misunderstood. Such issues usually crop up in companies where the policies are not clearly spelled out and not easily accessed by employees. Some of the issues could relate to taxes that are not paid in full, misclassification of employees, etc. This can be cleared up easily by issuing policies and sending employees a link to the location on the company website.

5. Shorten pay cycles: Having shorter or fewer pay cycles, errors can be minimized drastically. Most companies pay full-time employees on a monthly basis and part-time and contract employees every two weeks. With such varied schedules, the payroll department is always busy and with little time to make necessary changes. This can be avoided by instituting a single pay-day for every employee. This lets the payroll department do their work at a good pace and cut down on errors. Cost savings for switching to a single pay period from many could be over 30% of the overall budget. 

6. Outsource payroll: If for any reason payroll processing becomes too much to handle, it may be time to find an expert in payroll and let them handle everything – paying salaries, accounting for deductions and making tax payments.  Outsourcing lets companies of all sizes get the most out of a payroll specialist’s expertise and focus on activities they are better equipped to handle.


The importance of sorting out payroll activities has never been clearer. It pays for companies to step back and take a good look at payroll and all the departments whose activities interlock with payroll. Fixing bottlenecks and eliminating unwanted steps will make a big difference to not just salary processing but also to overall employee morale.

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Lingappa Amiyappa

Lingappa is the General Manager of Payroll Operations at Paybooks. He has worked in the payroll industry for 13 years gaining unparalleled experience in managing payroll, payroll outsourcing and payroll implementation.

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