Companies everywhere, in every industry, are frustrated by payroll. Some of the frustration is self inflicted, with legacy policies or other requirements outside of what a commercially available payroll is able to handle.
That leads to inefficient, onerous spreadsheets and manual processes that are subject to all kinds of errors. Those errors can put you in prime position for employee litigation, DOL audits, and union disputes.
Many employers are turning to automated payroll systems to help guard against paycheck disputes and wage violations. But that kind of transition isn't a simple plug-and-play solution. If you're going to explore a new payroll system, you want to know it's right for your company.
Let's explore six major signs it's time to switch payroll software.
Handpicked related content: How to Automate Your HCM System Without Regrets
Your Systems Can't Do It All
No payroll system can do everything, and there are inherent limits that you're bumping up against. You have complex calculations that need to be made every pay period, because the HCM system isn't designed to handle your company's unique pay policies, bonus pay, or salary allocations.
Although some people punch the numbers into a calculator, most payroll managers handle those calculations using spreadsheet macros. Macros can handle complex calculations for you, but they're fragile. They can be easily corrupted, and a simple typo into a cell can wildly throw off their calculations.
Payroll Takes Too Much Time
Besides the manual data entry and the flakiness of spreadsheet macros, you've also got time constraints and distractions going against you. You're constantly under the gun — all that payroll management must be completed on time, or people don't get paid.
Any process that requires manual data entry or sanity checks is inherently slow. You've got to take your time, because otherwise you're likely to make costly mistakes.
For some employers, payroll processing takes dozens of hours each pay period. That's time diverted from more important work, and it can add up to hundreds of hours per year.
You're Crossing Your Fingers on Payday
The last thing you want to hear on payday is, "There's something wrong with my paycheck." If you're using spreadsheets or other manual methods for payroll, there's no guarantee that you'll avoid inaccurate paychecks.
The U.S. Department of Labor estimates that at least 70% of employers are not in full compliance with the Fair Labor Standards Act (FLSA). Many of them don’t even realize it. FLSA noncompliance can result in heavy fines, lawsuits and even criminal charges. If you’re a government contractor, you could be debarred from government contracts.
Incorrect pay can lead to ugly legal action, fines, and costly settlements. Litigation is always a possibility — even non-profit organizations get sued by angry employees.
If you're questioning your payroll's accuracy, automated payroll could be a great fit.
Potential FLSA Audits Loom Over Your Shoulder
It's possible that someone else is already questioning the accuracy of your paychecks. Certain industries, like construction and manufacturing, are constantly in the crosshairs of the Department of Labor. But more and more, the DOL is conducting FLSA audits on businesses in every industry.
Likewise, employment litigation attorneys are eager to talk to workers who haven't received the compensation they're owed. Legal action can be lengthy, costly, and painful. Professional reputations can suffer, and you may lose your most valuable clients.
If you're a company that's susceptible to FLSA audits, automation may be an attractive option.
Unions Are Watching You
If you're a unionized employer, your union policies take payroll complexities to a whole other level — especially if you have multiple unions to deal with.
Unions keep a sharp eye out for payroll violations, and simple miscalculations can mean costly disputes and heavy fines. Each union has its own CBA, and you've got to be obsessive about complying with every detail.
Related reading: 5 Keys to Prevent Union Wage Disputes at Your Company
Your Systems Don’t Talk to Each Other
If you use two or more systems to influence your payroll (e.g. a time system and production system), they probably don’t naturally play nicely together. It takes extra work to perform incentive pay, job costing, or various reporting tasks.
If you're like most payroll managers, you've created workarounds, but they have to be done just so. Take a well deserved vacation, and your replacement will have to figure out how to make all the data come together.
It doesn't have to be that way. The right automated solution can integrate disparate systems that weren't designed to work together.
Business Benefits of Payroll Automation
What if you could run payroll with the push of a button? How much time would you have back in your week? How much more peace of mind would you have?
With the right payroll solution, integration solutions can be configured to automatically collect data from all of your employee systems and apply the calculations and rules you’re manually doing now. In a fraction of the time.
Best of all, results are guaranteed to be correct every time you run payroll.
Think your payroll can't be automated? You might be surprised. While that may have been true ten or fifteen years ago, technology has evolved dramatically in recent years. Automation can now be implemented effectively in every industry — construction, non-profit, manufacturing, professional services — you name it.
Maybe it's time to see how your business could benefit from payroll automation software.