Payroll can be a headache for even the most seasoned workers. It takes a lot of time and demands considerable attention to detail to guarantee that there are no errors. While 49% stated that the payroll process was under their HR department, 39% said theirs was with finance due to the legal nature of the role and its compliance requirements. And to add to that, it directly affects the financial directors’ concerns – the bottom line.
Finance to lead the payroll department
This is a subject that has been discussed many times with various people in various roles, and the conflict is clear. Payroll is, by definition, a financial function. Financial professionals have a better understanding of tax legislation and, as a result, are more up to speed on dealing with compliance difficulties. Payroll audits should also be done by financial specialists to ensure compliance. However, finance directors often have their eyes on other areas of the business, and payroll here may not get the attention it deserves. Indeed, a few cases in the past have occurred where payroll errors led to court cases largely due to a neglected payroll and where there was no clear payroll head. Hence, the blame falls on finance’s shoulders.
So, should payroll be considered a HR function?
Payroll goes beyond finance and is a pivotal aspect of HR, thereby ensuring employees are compensated fairly and on schedule. Although HR is frequently viewed as being administratively heavy, it is true that some of the older payroll systems and processes rely heavily on data, cross-referencing, etc., and a HR-owned payroll still needs to be compliant with the law and provide financial reporting.
So, what’s the alternative solution, and why?
A standalone payroll department
Surprisingly, when people commented on the poll, they tended to be more in favor of payroll having its own function. Does it actually justify the case? It affects the bottom line, has implications for legal compliance, and, if incorrect, can lead to internal chaos and catastrophic PR when things go wrong.
Wouldn’t you consider moving companies if your pay was always incorrect?
It was final; someone should be accountable for payroll. Perhaps by giving payroll its own department? This helps give it the attention it deserves. A dedicated head of payroll would ensure legislative changes are met and performed in a timely manner and that payroll audits are executed and followed up. It’s more of a serious business function than it appears on the surface. And if this doesn’t work, there is always another way. The outsourcing approach!
Payroll processing using a third party payroll provider
Payroll is by far the most expensive cost for a company, accounting for 68% of total overhead. Payroll outsourcing or automation can save you time and assure greater accuracy. It is reported that approximately 82% of people end up saving when moving to cloud services, and we ourselves have noticed our clients save around 30% of costs, all whilst passing the risk and liability of compliance to a trusted payroll and HR provider. By removing in-house payroll function and choosing to outsource, you not only remove the office stress but also free up time so your team, instead of duplicating data, can actually put value into the business, like recruitment and retention, which is a big focus for many at the moment.
So why don’t we use outsourcing for everything?
Well, in most cases, there are barriers to entry, but with cloud services, this has been removed, and there is no large capital investment like HR hardware and software. In addition, you also save money on office space, training, and support costs and gain from less stress, reliance on fewer staff, and concerns over GDPR compliance. So, HR directors are happier; there is no payroll stress, less data inputting, and no massive errors that are associated with this. They can plan HR initiatives, get the time to deliver them, and enjoy the benefits of doing so.
And what about any finance directors? They can expect a pat on the back. Remember, it’s all about the bottom line.
If your business is one of those that manages payroll through HR and finance, then now is the time to make a change, and we are here to assist you.