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What Businesses Need to Know About Running Payroll

What Businesses Need to Know When Running Payroll Internally

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.


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.

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