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Common Payroll Mistakes

Common Payroll Mistakes That Cause Big Problems

Payroll seems easy peasy when you’re on the receiving end. The only thing that matters is that we receive our monthly salary accurately and on time. If you’ve ever had your salary delayed due to reasons beyond your control or an amount that seems a little fishy, you’ve probably made a fuss about it and would require some explanation. On the other hand, if you’re in the payroll team, you’ll probably know that an excel sheet and some paperwork is not all that is required to ensure monthly payroll is processed seamlessly. Payroll is an essential function within any company that can often be stressful, tedious and time-consuming. Any errors or miscalculations are often deemed almost unforgivable and downright embarrassing, or worst, expensive for the company. But with the right tools and support, this process becomes entirely bearable. We spoke to our highly experienced team here at CXL to determine the most common mistakes that businesses make when running their payroll.

1. Not staying up to date with current tax legislation.

End last year, Malaysia was ranked 1st in the Asia Pacific as the most complex jurisdictions identified for HR and payroll practices. The report further mentioned that the most complex jurisdictions are characterised by frequent changes in HR and payroll legislation, and uncertainty surrounding the interpretation of laws and policies.

Since the pandemic began, changes to local tax as part of the government’s measures to support the rakyat and businesses have evolved. From changes in EPF contributions to special tax reliefs and contributions, the payroll executive must always be on their toes to ensure the changes in legislation is reflected where necessary. Errors in doing so may result in employee complaints and hefty fines that can be better spent during these trying times.

2. Missed pay calculations.

Processing payroll for full-time, part-time, contract and temporary employees? Of which, overtime, benefits, commissions, deductions, and more need to be considered at the end of each payroll month? We don’t have to point it out, but this can sometimes cause even the strongest payroll processing minds to grit their teeth in frustration. We get it; we’re payroll processors too.

While there may be no easy way to solve this, technology can help ease these burdens with automation. That will help reduce the time needed to keep track of numerous work schedules, timesheets, arrangements and more, also reducing the likelihood of payroll errors.

3. Jumbled up records, missed deadlines and leaked data.

Disorganised contracts and paperwork, whether soft or hard copies can cause numerous problems. When employees responsible for handling sensitive company data take things for granted, information is often missed and occasionally, leaked causing grievances to the business. Personal employee data must remain private, kept strictly confidential and shared only with authorised individuals or trusted partners when required. Hence, we would highly recommend that a proper filling system, security policy and data security system be emphasised for company payroll data.

4. Formulas and functions have gone wrong.

Copy and paste functions makes everyone happy! Not if it cascades to bigger errors. Some businesses are still running on good old Excel, and we don’t think there is anything wrong with that. From Vlookups, pivoting, summations, countifs and sumifs, Excel is an incredible business tool, but spreadsheets can get heavy and overpopulated. It needs to be regularly checked to ensure data is pulled correctly and the formulas are working just as intended.

5. Thinking anyone can process payroll.

From keeping up-to-date with tax legislation to missed deadlines, if the designated payroll processor or agency lacks the knowledge and experience, no amount of high-end payroll tools and software can help soften the blow of a payroll mistake. Hence, it is imperative that businesses understand that hiring the right person or partner with tools, knowledge and experience that fit your business requirements is just as important as any other key business function.

We agree that it would very much depend on your business needs. For example, paying tens or hundreds of thousands of ringgits wouldn’t make business sense if your headcount is still relatively small. Depending on the size of your workforce and how complicated the employment arrangements are, every business is unique and has its own needs. Speak to partners on a customised package and ask the right questions. Outsourcing and automation (no matter how small) may help improve tedious processes, in the long run, thus increasing productivity levels and keeping your business safe.

Minimise Friction with Payroll Outsourcing

Acknowledging these common payroll mistakes is crucial for any business. Today, there are many ways payroll can be processed, whether in-house, outsourced or by business owners themselves. All which done correctly will work for companies depending on their needs. As companies grow and evolve rapidly, thanks to COVID-19, many business functions have been reviewed to ensure daily work processes continue as usual. Payroll is part of that function and must be given its due diligence. As is all business processes, it must jive with the company and provide hassle-free flexibility for growth.

Find out how your business can benefit from outsourcing as one of the ways to reduce friction and minimise errors and mistakes in your process. CXL Payroll & HR Outsourcing service guarantees compliance, reliability and security of your company profile. We’re committed to help you develop a successful payroll management. 

 

Source:

Report: Malaysia has the world’s second most complex HR and payroll practices, right behind Belgiumhe 5 Benefits of Green Spaces in the Workplace.

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