Solutions to Common Payroll Problems
Payroll is the process related to numerous financial records of employee’s salaries such as work wages, CPF, bonuses, employee records, etc. It is a significant factor affecting net income of your company since payment to employees and submitting taxes to the governments are imperative in any business. Unfortunately, processing payroll is a regular anxiety of SMEs due to the requirements of local laws and regulations and the expectations of accuracy while meeting multiple deadlines.
Whether outsourcing or having an accountant to process payroll, here are the common matters you should be attentive about to ensure payroll processes are being done properly in your organization.
Inaccurate employee information
SMEs usually have more diversity in the various work types such as temporary/ freelance staff or hourly contractors, leading to a more complicated human resource database regarding information such as age, nationality, date/ types of hiring, salary, account number etc. Each work type is subject to a particular employment regulation with different deductions and bonus payouts according to labour laws. As the payroll process requires dealing with many items, errors are likely to occur. For instance, the employee’s identification number could be wrong or outdated, or a temporary employee’s payslip is miscalculated due to misclassification as a permanent hire.
Non-compliance to payroll statutory requirements
SMEs should attentively follow the Singapore statutory regulations relating to payroll. As the government may adjust these regulations/ tax rates, those who do not keep up with the announcements may fail to comply with the latest obligations and may be subject to penalties. Other concerns are submitting employees’ salary details to IRAS. When your business expands and employs more workers, processing payroll can quickly become a burden.
Miscalculating overtime wages
Calculating overtime hours of employees can be troublesome as it is difficult to track these hours accurately. If the hours are inaccurately tabulated, the disparity might result in a loss to your business or unsatisfied employees.
Confusion over taxes
Though SMEs can be operated on a smaller scale, the payroll process has never been simple with tax filing. Besides the problem with pre-taxes and post-taxes, some other issues such as missing business records to include sales receipts/ invoice or failure to differentiate between deductible and non-deductible expenses will result in incorrect tax calculation, consequently increase the risk of facing monetary penalties from IRAS.
Payroll employees usually experience some stress from keeping their tasks on schedule. Usually, payslips are required to be sent on time to employees every month. Delayed payment is not healthy for staff morale. Also, if you fail to file taxes to IRAS as scheduled and let the tasks pile up, there is a high chance that you will neglect to fulfil the requirements or have difficulty in tracing back historical documents.
Intentional human fraud
In contrary to the above issues which are caused unintentionally, another risk is when your staff make up fraudulent documents on purpose, for example, to pay a terminated/ghost employee or to fake their timesheet to get paid a higher salary than the actual amount. Last year, a payroll executive in Singapore was arrested for the offence of stealing more than S$1.5 million by making up salary details of herself and 2 former staff, which were only detected after she resigned (The Straits Times, 2017)
Solutions to Common Payroll Problems
Most SMEs may underestimate the above problems until they encounter it personally. Without efficient management, small issues can snowball into larger ones, as many hours of manpower are used to investigate and rectify the mistakes, causing an interruption in your business process.
An option SMEs usually tap on is to outsource the payroll process to a third-party. This solution allows you to be free from the stressful concerns of doing payrolls properly. Nonetheless, it is important to do thorough research and consultation to select a reliable and professional payroll service provider. In addition, it is suggested to only outsource partially. Instead of relying on your service partner to take on the entire responsibility, some confidential tasks should still be done by your in-house team. On the partnership agreement, make sure to discuss thoroughly how the payroll will be processed so that you can still supervise and take over when needed.
A fully integrated ERP solution
Otherwise, you can remove payroll headaches with an all-in-one ERP software solution. By tracking workers’ attendance using Facial Biometric Timesheet or a Labour Clocking screen, working hours and timesheet can be automatically recorded with project code tagged and calculated in the Synergix ERP system. As the system conforms to IRAS regulations, additional payments (public holiday, fixed additional amount, claims etc.) and deductions (fixed deduction, employee’s CPF, taxes etc.) are computed precisely and employee’s monthly payslips are generated accordingly without human intervention.
The ERP system not only provides an in-house, proactive solution to your business’ payroll issues but also offers digital facilitation to every corner of your business such as project costing, manufacturing, distribution, customer relationship management, financial management and business analytics, etc.
You can learn more about ERP software solutions by contacting Synergix ERP consultants. With more than 28 years of experience in developing and providing ERP system to SMEs in various industries, we are confident to listen to any of your requirements as well as offer exceptional solutions to help you achieve sustainable growth.