3 Things That Can Impede Your Payroll Process In HR - ToOLOwl
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3 Things That Can Impede Your Payroll Process In HR

Payroll process in hr is the regular payment function of companies. The process involves arriving at the ‘net pay’ of the employees’ after-tax deduction and necessary pay adjustments. Payroll processing can be an ordeal for new employers. A simple tax calculation error, lack of funds in old payroll accounts, outdated payment schedules, or a direct deposit mistake are not uncommon mistakes that employers commit. But there are other errors that can ruin your day. If you’re not aware of these hidden impediments, then payroll processing can become a nightmare for both you and your begrudged employees. Here are three such mistakes that trouble the employer:

  1. Bank Holidays

Employees look forward to festivities and bank holidays and more so when they come around paydays. But the holidays might turn sour for both the employer and employee if the payday is scheduled around federal holidays. The normal employer usually schedules payroll processes a few days before the actual payday for smooth processing. But if you run payroll like normal (e.g., three days before payday) around a bank holiday, your employees won’t receive their direct deposit funds on payday. To exacerbate the situation, the payment will go through the next business day, which can be days later than normal.

You could expedite the payday process by contacting the bank, but that would lead to an extra surcharge for you- leading to losses.

What to do: Mark your calendars for federal holidays and contact your bank ahead of time. You can prepare for paydays after the holiday or before, but the latter is advisable. That way, employees receive their pay a day before the holidays, increasing job satisfaction.

Make sure you contact the team about receiving the payment early. So, make sure you submit your payroll early and mind the holidays.

  1. Three paycheck months

This problem is noticeable for employers who prefer the biweekly payment plan. Most employers are able to regulate the biweekly payments efficiently but fail to account for the three paycheck months. The pesky third paycheck is a sucker punch to the bank accounts. Not to mention that you could and most probably would forget to run the payroll processes for those extra weeks.

Under the biweekly plan, employees receive 26 paychecks annually. Where did the extra two paychecks come from? It comes with three paycheck months. There are two months in the calendar year, which would form three paycheck months.

What to do: Planning is an effective solution. Plan ahead for the extra payrolls at the start of the year. You could also try and adjust those paydays by rearranging and scheduling the workdays. You should also add the third paycheck to the monthly and annual budget. Doing so would help you avoid cash flow problems. Other measures could include:

  • Speeding up collections
  • Cutting back on expenses to produce the extra funds from the original budget
  • Increasing the revenue
  1. Leap Years

The extra day received in February every four years can be an unwanted and unappreciated surprise for employers. It can trip up your payroll processes. Depending on your pay frequency and the day of the week receiving the extra day, you might face some issues. You might wind up with an extra pay period if you run your payment processes following the weekly or biweekly plans.

What to do: To avoid running into trouble, mark and remember the bonus day. If needed, absorb the extra day by effective planning into one of the workweeks. Keep your employees in the know of the process to avoid disgruntled workers at your hand.

Honourable Mentions

The leading examples are the most common hidden traps, but they are not the only ones. Other potential trip-ups could come from easily avoidable payroll mistakes, such as:

  • Failing to take the tax rate changes into account
  • Blunders in the accounts department leading to miscalculation of employee wages and taxes. This will always be trouble for you as underpayment could be followed by a lawsuit, and overpayment leads to extra losses for you.
  • Using wrong payroll forms and protocols
  • Missing deadlines

Payroll processing can be a tedious task for business owners who are not experienced. Keep these points and more under consideration, and you shall ensure a smooth payroll process for your employees. You could also hire a payroll processing service, as there are many available in the market, to further smoothen the process.


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