Common mistakes people do while processing payroll

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Payroll is the most discuss topic when it comes to employees in HR department. As mentioned in all our articles, payroll is critical, sensitive & needs to be compliant.

Let us understand what needs to be done to avoid basic mistakes while processing payroll.

There are 5 key stages for payroll generation, let us see at each stage what are typical mistakes that can be avoided

1. Planning:

May it be Payroll or employee engagement everything needs planning. The precision with which payroll planning is done, is like 50% of the battle won. Most of the organisation typically misses out at planning stage, of course the planning is done but it is at high level, losing the depth. Check points for accurate data input towards payroll & pointers to checking of payroll output generated needs to be included at planning stage.

Caution note: Make a detail checklist, do not omit any item even it has low weightage as an input for payroll. Identify the resource who will carry out each item under the check list. Lastly define the timeliness and DO & DONTS.

2. Execution:

While planning completes 50% job of payroll generation. Any planning is not successful without equally accurate execution. The team needs to be competent to generate a successful payroll. Regular training, improving current process, benchmarking previous month’s payroll to improve the next payroll, learning from the past mistake [knowledge sharing] are few things that needs to be practised.

Caution Note: follow the planning meticulously, raise a flag for any deviation found, State wise statutory rules, Payroll tax compliance knowledge & overall payroll experience are mandate for successful generation of payroll.

3. Checking:

We all understand the concept of maker & checker. It is finally the checker how is responsible for signing off the accuracy of payroll, checker works as quality assurance personnel. The critical component at this stage is the TIME. Execution team has to submit the payroll data on time for the checker to carefully check the accuracy, before they sign the sheet for salary disbursement.

Caution note: List of data should be available with checker like, comparison file of current to previous month salary, analytical data with reasoning for deviation, similar other information needs to be made available.

4. Audit:

Some people have asked me if we are checking why Audit? My response: checking is done by my internal set of people, Audit is another set of people with different angle of thinking, lot of time they are even external agency to verify accuracy, compliance, taxation & adherence to the practises set my an organisation. Any of the item found non-compliant may result in direct or indirect error towards payroll generation.

Caution Note: The inputs & report from the Audit team needs to be implemented / acted upon religiously. There could be a difference on thoughts or practical challenges for implementation, but it can always be discuss to arrive at a realistic & compliant solution.

5. Technology

Any business or functions without correct use of technology in today’s world is the biggest ignorant to achieve any success. Payroll software is the last requirement, but A MUST for generating a successful payroll. Key pointers to check in a payroll software.

  • Integration with time & attendance data
  • Configurable CTC with required addition & deduction
  • Allows to create payroll process & checklist with capability to monitor each actionable item with a TAT
  • Adherence records to Payroll compliance as per statutory requirement

Caution Note: evaluate the correct solution & solution provider for a long term support.

“Payroll processing is a team efforts, needs clear communication & close coordination” – Happy Payroll processing!

Finally do share your case study on successful payroll generation to us on

> Useful links on Payroll

Refer to checklist for accurate payroll processing, how to design compensation Benefits / Payroll, Things To-Check In-House for successful-Payroll Outsourcing

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