Efficient payroll management is crucial for every organisation, ensuring accurate and punctual salary disbursements while maintaining adherence to regulatory requirements. Organisations face many challenges, from grappling with regulatory changes to tackling human errors. In this blog, we will explore the most common payroll mistakes and highlight how HRMS Software can help to mitigate these errors while improving your payroll processing.
Common Payroll Errors
The HR department can encounter a handful of common payroll errors during payroll processing. Ernst & Young (EY) reported in a 2022 survey that, on average, organisations make 15 corrections per payroll period, resulting in a cost of approximately USD$291 for each correction. Let us look at some of the most common mistakes that can occur during this crucial process!
1. Manual Data Entry Errors
Relying exclusively on manual data entry significantly raises the risk of mistakes, such as inaccurate CPF computations and OT calculations. These errors can lead to overpayment and underpayment, creating dissatisfaction among employees and compliance issues.
2. Incorrect Employee Data
Inaccurate personal details, such as employee names and bank account information, can cause payment delays or errors.
3. Non-compliance with Statutory Regulations
Failing to meet statutory regulations is a common mistake in payroll processing, which can result in penalties imposed by the authorities. This mistake encompasses inaccurate CPF computations, overtime payment, and failing to distribute itemised payslips for your employees.
4. Incorrect Salary Calculations
When HR professionals rely on manual calculations for allowances, deductions, and overtime payments, there is a higher chance of incorrect salary calculations. These mistakes can result in discrepancies in the actual amount that the employees should receive.
5. Overlooking Tax Changes
Tax rules and regulations are subject to regular changes, demanding continuous monitoring from the HR personnel. Failing to stay informed, mainly if you handle payroll manually, may result in overlooking these changes, potentially leading to non-compliance and penalties.
How Payroll Mistakes Can Impact Your Company
Payroll errors can create employee tension and challenge your payroll and HR teams. Here are three specific areas where inaccuracies in payroll can negatively impact your business:
1. Financial Losses
The repercussions of payroll errors can be quite severe, causing significant financial setbacks. The consequences can be detrimental, whether due to miscalculations leading to overpayment or incorrect computations of CPF contributions and overtime payments, resulting in fines and penalties from the authorities.
2. Employee Turnover
Salary is a major driving force for employees when searching for a job and is a critical factor in retaining them. Consistent errors in payment processing may prompt your employees to consider other job options with an employer who can guarantee accurate compensation. In addition to that, you will face heightened costs associated with recruiting and training these new recruits.
3. Damaged Reputation
Payroll inaccuracies have the potential to negatively impact a company’s image, both within the organisation and to the public. It could deter clients and business connections from associating with a company with a history of payroll inaccuracies.
How HRMS Software Can Resolve Payroll Errors
With a comprehensive range of modules, the HRMS Software is designed to optimise HR practices by encompassing various functions such as time attendance management, payroll, and leave management. By leveraging this software, you can streamline the calculation of overtime, salary computations, deductions, bonuses, and taxes. Furthermore, it provides multiple reports enabling informed decision-making regarding your business’s financial health while ensuring employment laws and regulations compliance.
Here are some ways that HRMS Software can assist in resolving payroll errors for your company:
1. Automated Salary Calculation
HRMS Software streamlines salary computations by automatically calculating overtime hours based on timesheets, deducting the necessary amounts for each employee, calculating taxes, and processing payments accurately and efficiently every pay period, eliminating the need for manual calculations and ensuring error-free salary disbursement every month.
2. Compliance with Regulations
The payroll module in HRMS Software automatically calculates payments such as CPF and Foreign Worker Levy (FWL), guaranteeing accurate computations. Additionally, it simplifies the tedious process of manually filling in IR8A forms by automating income report submissions to IRAS. This ensures timely and accurate submissions, reducing the risk of penalties and non-compliance.
3. Centralised Database
The centralised database provided by this software enables streamlined reporting, reduces data duplication, improves accuracy, and ensures consistency across different modules. You can easily access all the necessary information from a single platform by eliminating the need for Excel sheets or paperwork.
4. Payroll Reports
HRMS Software provides users with comprehensive real-time data and valuable insights into the payroll process. This powerful tool enables the creation of reports covering various payroll aspects, including expense breakdown, salary allocations, overtime calculations, leave utilisation, and more. You can make well-informed decisions regarding your business operations by leveraging these reports.
5. Employee Self-Service
Many of the HRMS Software available in the market today come equipped with self-service portals that empower employees to view their payslips, access income tax data, update personal details, and receive instant updates from the HR department anytime, anywhere, and more. This feature enables employees to access essential data without having to reach out to the HR department.
Looking for the best HRMS Software?
Are you looking for the most practical HRMS Software to simplify payroll processing for your business each month? Info-Tech HRMS Software is a practical and all-encompassing tool designed for HR departments in companies of any scale. Featuring a range of beneficial modules such as Payroll, Leave Management, and Attendance tracking, this software enables businesses to optimise their operations while minimising the chances of recurring payroll errors. With Info-Tech HRMS Software, you can streamline salary calculations and distributions, submit taxes directly to IRAS, deduct CPF contributions accurately, access real-time payroll data, and enjoy a range of other capabilities!
Your payroll process can be made hassle-free with payroll software. Contact us at +65 6297 3398 or sales@info-tech.com.sg to know more!
