What Businesses Need to Know When Running Payroll Internally

What Businesses Need to Know About Running Payroll

As the COVID-19 pandemic rolls unbelievably into its second year, continuing to affect both lives and livelihoods, organisations around the world are undoubtedly rethinking the way business processes are done. This has certainly hit home for many organisations as they strive to proactively manage the changes they find themselves facing in such disruptive times.

Organisations need to remain agile in how they deliver their services, stay connected to their customers and find ways to improve service delivery, expand their portfolio and drive growth. But in the pandemic that organisations have been facing for some time, there is even more upheaval, uncertainty and disruption.

Payroll is a critical component of any business given that it is a core recurring business activity. Ensuring its continuity is of utmost importance. Taking this into consideration, we’ve put together some key points that every business that runs payroll internally should take note of.

1. Ensure your payroll team is defined and mapped out against responsibilities and skill sets.

It is important to have the best payroll team possible.

Your payroll manager typically supervises a team, the size of which might vary depending on the organisation. The manager reviews and approves all payroll payments and provides advice on payroll issues.

The manager also educates employees about various issues such as changes in legislation or regulations, updates on corporate policies and clarifications on pay structure.

As such, he/she needs to have a list of all team members and then map them out based on their responsibilities, skillsets and contact details. By doing this, tasks can be quickly and easily redistributed if there are changes in the work roster, availability of staff, in the event of lockdowns or any disruption.

Particularly where individuals or teams are required to work remotely, remote access credentials and processes need to be clearly defined and communicated so that payroll operations may continue uninterrupted.

If your organisation uses a payroll SaaS (software-as-a-service), there would typically be a task scheduler feature within. This would enable the team lead to assign payroll processing tasks based on the skillset and availability of team members even if they work remotely.

2. Having up-to-date technology hardware and software, along with your cloud data storage is critical.

Having up-to-date technology hardware and software, along with your cloud data storage is critical

These are twin concerns that should be high on your list of priorities.

Organisations that are still running their payroll platform on-premise should ensure that their payroll team has a secure VPN (virtual private network) connection to the payroll platform and data storage. A VPN creates a secure connection between you and the internet. So when your team uses a secure VPN, they ensure that all data traffic is encrypted. This keeps hackers away and ensures devices are not as vulnerable to attacks.

Today, the definition of a workplace has become increasingly flexible as organisations have to consider work from home arrangements. In lieu of this, a robust security system is a must when remote access is allowed into the network.

Alongside this, employees need to be provided regular training and communication to support this initiative. This ensures that everyone is on board in terms of use, rollout,  security, common weaknesses and threats and how these may be addressed.

Furthermore, a storage solution is needed. Your organisation is not just transmitting and processing data. You will also be required to maintain records, all of which are processed, transmitted and stored electronically. A data storage solution ensures that your data is easily accessible and can be relied on which is of paramount importance when processing payroll.

3. Keep abreast of regulatory changes especially in a dynamic environment.

During a pandemic, governments around the world are responding to the situation as it unfolds.

Governments have been and will likely continue to make weekly, sometimes, daily, announcements and even, changes to regulations, to support the population. For example, in Malaysia, the government introduced stimulus packages as a response to the national lockdown measures put in place due to the COVID-19 pandemic.

This is not all. Other announcements have been and may continue to be made. These include the deferment of regulatory filing dates, wage subsidies as well as changes to the social security contributions. All of these need to be tracked as they can complicate payroll processing. When these are managed well,  infringement and penalties can be avoided.

Keep abreast of regulatory changes

How can payroll be made simple.

This is where outsourcing can prove to be a valuable strategy.

It enables an organisation to remove critical administrative tasks from their core concern, freeing them up to focus on driving the business forward. Outsourcing can prove to be more cost-efficient as it negates the need for additional hardware, software and manpower for this task.

Let’s take a look at what happens when an organisation decides to outsource payroll.

1. One-time payroll activities.

These include conducting a business requirements study on the organisation to evaluate their specific needs and how support can be customised. The payroll processing platform will then be configured to support this. This includes establishing rules and protocols.

Relevant data will be captured and a migration exercise carried out. Dry runs to check the system and data would be conducted in parallel to ensure a smooth transition and to catch potential issues early.

2. Recurring payroll activities.

Once everything has been established, the first payroll processing can occur which involves crediting wages to the appropriate employees, creating the necessary supporting documentation (including payslips) and statutory reporting.

A system and protocol will be established to manage both client and employee queries as these surface.

3. Annual payroll activities.

The scope includes the preparation and submission of the annual tax returns. In Malaysia, these include the annual employee tax return (EA form) and the annual employer tax return (Form E).

4. Payroll reporting.

The pandemic has created massive complications. National lockdowns have been and continue to be enforced. Brick and mortar businesses continue to struggle with moving forward especially if they are not able to digitalise key aspects of their business.

This can lead to revenue loss. There have also been supply chain disruptions and the introduction of remote work to get around these challenges.

The fallout from the pandemic signals a return to basics.

Organisations are shoring up value and driving costs down, with a renewed focus on risk management. The latest Deloitte report on Global Outsourcing confirms that “cost reduction is back on top and that cloud and robotic process automation are table stakes”.

In conclusion, there are many ways organisations can minimise the disruption, negative

impact and uncertainty that is present in these volatile times. The use of outsourced payroll and the digitalisation of data can work well to help organisations navigate forward successfully.

Optimise Your Payroll Management with Outsourcing

In conclusion, there are many ways organisations can minimise the disruption, negative impact and uncertainty that is present in these volatile times. The use of outsourced payroll and the digitalisation of data can work well to help organisations navigate forward successfully.

Explore outsourcing with us to find out how your organisation can benefit from the expertise and technology that we have to offer. CXL Payroll & HR Outsourcing service guarantees compliance, reliability and security of your company profile. We’re committed to help you improve your payroll process that can optimise your resources, talent, knowledge and tools.


Author Bio

Fariz Abdullah is the Chief Executive Officer (CEO) of CXL Group. The organisation consists of two divisions— Contingent Workforce and Payroll & HR Outsourcing. Under his purview, Fariz has transformed CXL Group into an HR organisation that believes in the importance of advancing through technology but with a deep focus on the human touch in an increasingly digital era.

Managing Payroll in a Pandemic

Hassle-free payroll processing

As the pandemic rolls into its second year, many organisations face critical challenges in managing both the lives and the livelihoods of their employees. Keeping their eye firmly on the prize, organisations face a constant battle, balancing between focus on the present and the future. How payroll is managed is one such worry.

Managing Payroll Can Be Painless Yet Secure

Naturally, some organisations have had to ask themselves the twin questions: Should our payroll be outsourced and if so, is it worthwhile for us to do this?

So, let’s start by defining what payroll outsourcing means. As the name suggests, outsourcing payroll involves engaging a third party to manage and process all payroll and claim-related payments to employees. Typically, this involves the payroll outsourcing provider collecting relevant payroll and time attendance information before processing the data.

This is undertaken in order to derive the wage payout, income tax and applicable compulsory contributions. Following this, the provider ensures that the regular statutory reporting is delivered to the local authorities and to their client as well as distributes such payments.

Hassle-free payroll processing

Outsourcing can bring significant advantage

Is outsourcing right for everyone? It can be. Regardless of the size of the organisation, a major benefit to outsourcing payroll is the sheer time and resource savings since this is a recurring exercise. Time and effort saved can then be devoted to prioritising the core business and helping it move forward.

In a pandemic, a focus on the core business is critical to regaining the lost momentum. There are negative impacts sustained as a result of enforced lockdowns, disruption to service delivery, impacts on the supply chain and more.

Outsourcing payroll is beneficial regardless of whether your organisation has a digital footprint or not. It can be a particularly effective strategy for brick and mortar businesses that have had to scramble to transition to digitising workflows and processes.

So what are clear advantages for organisations to consider payroll outsourcing in a pandemic?

Payroll outsourcing affords you flexibility and can be integrated with your current business processes and practices

No organisation wants to take two steps back to move one step forward. Bringing in a new solution should not result in damage or loss to other important processes.

For example, let’s say that your organisation already runs on an end-to-end ERP solution. A good payroll outsourcing provider will be able to seamlessly integrate your payroll and finance modules to both collect and process your organisation’s payroll data. Likewise, if your organisation uses time attendance data to process salaries, the integration will minimise human intervention.

Employee Self-Service platform to reach an engaged audience

You are assured of working in a trusted environment

Security is key. Your organisation will rest easy knowing that your data remains secure. Start by asking your provider about their identity management and verification processes (such as biometrics or facial recognition, for example) to ensure only properly credentialed people see your data.

A reputable provider will ensure the safety and security of the data centres they use. Review the office location for potential external interference or physical threats. Ask your provider about their security policy including frequency and quality of checks and controls. Enquire also about security training conducted as evidence of their security policy measures.

Reputable providers understand the value and assurance provided by international benchmarks

Well regarded providers embrace international accreditation and ISO certified processes. ISO (International Organisation for Standardisation) works not just to provide standardisation across an array of products and companies. The focus is on process improvement, safety and quality.

These certifications, therefore, provide much-needed peace of mind that products and services are not just compliant but meeting international standards.

Tremendous cost savings from reduced manpower

Payroll outsourcing dispenses with the need to hire a team of HR professionals to handle these ongoing tasks. An aspect worth highlighting is the availability of the pay-per-use option.

A payroll outsourcing provider would typically have an expanded suite of services and offerings. A pay-per-use option enables you to leverage selected functionality as required without needing to invest in any capital or recurring hardware or software costs.

HR on the cloud ensures an optimal employee experience

Typically, a cloud solution is accessible anytime and anywhere. End users have a range of access options, from their laptops through to tablets or smartphones. A range of HR offerings can be made accessible, from timesheet management, claims and leave management, digital payslips and more.

This eases the completion of repetitive yet important HR tasks, omitting tedious paperwork and redundancy. This saves time. Additionally, geolocation (the identification of the geographic location of a user through a variety of data collection mechanisms) enables employers to track employee attendance in real-time. In the end, the HR process becomes smooth and seamless.

Be assured that your compliance needs are met

Typically,  an organisation possesses a legal entity which means it will be subject to local laws and regulations which govern the treatment of their workers or employees. As authorities are vigilant about enforcing regulations and these regulations can be enlarged over time, it is essential that organisations follow best practices and comply with local laws.

Be clear that payroll involves more than just wages and bonuses. Payroll involves recruitment and layoff and all manner of compensation – sick leave, incentives, holidays, insurance, pension schemes and/or other benefits. Because payroll systems are linked to accounting and tax laws, they are subject to legislation which makes the above critical. And the penalties, should they be incurred, can range from fines to prosecution.

Outsourcing puts the responsibility for preparing, verifying, submitting and making payments, with your provider. As such, reputable providers have expert knowledge of local statutory regulations and other compliance requirements.

A SaaS (software as a service) offering brings significant advantage and cost efficiency to the organisation

From a business continuity and disaster recovery perspective, organisations are able to take a more proactive, ‘always on’ stand to manage their collective data.  SaaS offerings typically remove the need for organisations to worry about hardware installations and instead, are able to tap into the skilled expertise of their payroll provider. As the diagram below indicates, this approach supports business growth as it is scalable, with the reduced operational hassle.

SaaS Model

These are simply a few of the advantages for organisations  to consider payroll outsourcing. Is it time for you to consider outsourcing your payroll? If you are ready to find out how managed payroll can benefit your organisation, feel free to contact us with any questions for an obligation-free appointment.

Author Bio

Fariz Abdullah is the Chief Executive Officer (CEO) of CXL Group. The organisation consists of two divisions— Contingent Workforce and Payroll & HR Outsourcing. Under his purview, Fariz has transformed CXL Group into an HR organisation that believes in the importance of advancing through technology but with a deep focus on the human touch in an increasingly digital era.