6 Ways Outsourcing and Automation Can Address Common Payroll Challenges

Among all internal processes in the office, payroll is arguably one of the most complicated, time-intensive tasks to complete. While most employees tend to count down the days to the next payday, accounting teams and HR departments often dread it.

Why? Because there are a lot of factors that contribute to the efficiency required to process monthly payroll.  

Regular monitoring, constant tracking, employee diligence, and up-to-date processing—just to name a few—are difficult enough when you’re managing a small team.  

Imagine how much more confusing and tedious the process can get as you scale your business, and your team members grow.

In between all these tedious and usually paper-based tasks, it’s necessary to make sure that you’re doing everything with extreme accuracy.  And therein lies the biggest challenge for HR and accounting teams. When you rely on manual processes as well as paper and spreadsheet payroll systems, the whole process becomes prone to error and significantly time-consuming.

For most companies, the solution comes with the option to shift the traditional payroll process to more efficient systems.  According to reports, “increased use of time and attendance (T&A) apps have simplified processing of hourly payroll.”

Outsourced, software-based solutions can enhance internal payroll functions and ultimately free up your HR or accounting team’s time so they can focus on more strategic tasks. Coupled with automated time tracking and monitoring, the entire payroll process becomes easy and most of all, accurate.  For more insight, here are some common payroll challenges that can be addressed by outsourcing and automating critical processes:

1. Offload tedious back-office tasks for more efficient use of time

According to a study, “More than one‑third of managers say they use mostly manual processes in the workplace.” Bouncing off that statistic, “Almost 70 percent of managers say manual processes leave them less time for strategic initiatives.”

Handling payroll in-house requires a lot of time, brain work, and attention to detail from your employees. This means every month, HR and accounting teams have to track and monitor the time cards of multiple employees, some of whom don’t even report to a single physical space.

A lot of effort is spent gathering all the necessary documents needed to complete their payroll calculations, which can be difficult and time-consuming.

Additionally, as you very well know, not all employees are diligent about tracking and filing the necessary paperwork required for attendance, overtime, PTOs (paid time offs) and whatever else HR needs to accurately process payroll.

When all these tasks are removed from your in-house HR and accounting team’s plate, staff can use their time to focus on core tasks. They save an enormous amount of time by not having to chase after data manually. Coupled with tools like online time trackers, there’s no need to consolidate information themselves. They have the option to simply export data and submit comprehensive monthly timesheets.

2. Provide better transparency between employees and administrative teams

It’s not uncommon for employees to have questions about their statements or payslips. Maybe they want to understand how certain computations were reached; maybe more clarity is needed regarding period totals, inclusions, incentives, or time offs.

Whatever the case, this kind of back and forth can cause bottlenecks and delays when you’re doing payroll in-house.

Outsourced payroll systems mean these questions can be managed better through your internal team. Additionally, if you use an online time tracking system to log in data and hours, everything is easily accessible online for better transparency.

This offers both HR, accounting teams, management, and the employees themselves easy access to their timesheets and provides better transparency.

3. Bring down internal overhead costs to manage budgets better

A lot of businesses assume that saving money means doing everything in-house. After all, then they have people employed that are already knowledgeable about payroll processes.

What would be the point of paying an outsourced company or using technological solutions to do the same thing?

However, given the time it takes to produce and manage everything for your payroll month in and month out, you’re actually spending more than you can imagine.

Due to the level of accuracy required for the payroll process, it’s not uncommon for HR and accounting teams to delegate their top employees to this task.

Between calculating employee hours, time offs, sick leaves, deductions, and taxes; gathering data that varies from one employee to another; getting checks signed and generating payroll reports, that’s a lot of executive time lost to something that can be addressed by external solutions.

If you consider the time your top employees have to invest just so they can process payroll every month and peg that against the cost of an outsourced payroll system, you might realise there are more cost savings in the latter.

4. Ensure consistent and guaranteed government compliance

Payroll computations should also always be considered in the context of tax regulations, laws, and working regulations.

Any errors made in payroll processing can be costly. If you’re doing everything manually, the risks of this happening are pretty high.

Keep in mind your business is legally responsible for complying with these policies. Failure to do so can leave your business vulnerable to audits and penalties.

There’s also the fact that these rules are constantly evolving and changing; and if you’re doing everything in-house, it’s your responsibility to keep up.

Outsourcing your payroll to a company that focuses on delivering payroll services can be counted on to stay on top of these new rules.  They understand PAYE regulations and are diligent about compliance. This also means you can easily reach out to them should you have any questions on payroll norms.

5. Access to comprehensive payroll features for better operational efficiency

When you’re tracking everything using spreadsheets, it means you also have to consolidate everything manually when payroll period rolls around.

Outsourcing your payroll can give you access to new and more advanced features for collating and importing data and designed to specifically meet operational needs.

Additionally, the use of online time-tracking tools can help centralise timekeeping, ensure better accuracy, and provide essential integrations for improved operational efficiency.

This means employees, even those who work remotely, can still accurately track their hours. Some online tracking platforms can even gather GPS coordinates every time an employee clocks in or out, making it very easy to monitor whether your employees are actually at work, on-site, or not.

6. Prevent time fraud in the workplace

Time fraud is the practice whereby employees pad their timesheets, which is very hard for HR and accounting teams to monitor when you’re doing payroll manually.

Businesses essentially have to rely on their employees to responsibly and honestly enter the correct time and data on their timesheets. Typically, managers are the ones responsible for verifying that these hours are correct before submitting timesheets to HR or Finance for payroll processing.

Throughout this whole process, employees who want to pad their timesheets will, unfortunately, have a lot of time to do so.

An outsourced payroll team can dedicate much-needed attention to ensure that businesses don’t become victims of time fraud. Combined with other online tools for tracking time, you can ensure greater accuracy and transparency when it comes to logging in employee hours.

Bottom line?

Bear in mind that in-house HR and Finance teams are not only dedicated to managing payroll–it’s just one of the things they have to take care of. Investing in the right solutions can streamline critical tasks in your workplace.

An outsourced payroll provider, coupled with the right automated tools, can significantly simplify this essential business process, ultimately saving you a lot of time and money.

Author Bio

Dean Mathews is the founder and CEO of OnTheClock, an online employee time-tracking app that helps over 8,000 companies all around the world track time.  Dean has over 20 years of experience designing and developing business apps. He views software development as a form of art. If the artist creates a masterpiece, many people’s lives are touched and changed for the better.

When he is not perfecting time tracking, Dean enjoys expanding his faith, spending time with family and friends and finding ways to make the world just a little better. You can find Dean on LinkedIn.

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