How Is Your Business Minimising Payroll Errors?
New research from the Australian Payroll Association has found that one third of Australian organisations admit to making employee payment mistakes in every pay run, but senior members of the business like the CEO and CFO never find out. These mistakes prove to be costly, with a 2017 report from PWC suggesting that payroll mistakes cost Australian employers at least $4 million yearly.
Australian Payroll Association CEO Tracy Angwin says it’s crucial for businesses to minimise payroll errors. “Accurate pay and entitlements involve making not only the correct pay and award calculations, but accurate leave entitlements and superannuation contributions within the correct timeframe,” Angwin says. “When payment mistakes occur, companies need to be transparent not only with the employee but with their superiors so that the errors can be corrected, and steps taken to avoid them in the future.”
The research also discovered that as organisations grow, so does the rate of mistakes. 69% of organisations with more than 10,000 employees made errors at least every month, as do 55% of businesses with 1001-5000 employees. Meanwhile, just 21% of businesses with 51-200 employees made mistakes at the same rate, with this number falling to just 16% of businesses under 50 employees. This correlates with CEOs and CFOs never finding out about payroll mistakes, with this being the case in 49% of companies with more than 1000 employees, but only in 18% of businesses with less than 200 employees.
Payroll errors can also affect staff retention, which can lead to a whole host of other issues. Research by the Workforce Institute found that 49% of workers would try and find new employment after just two payroll errors. Furthermore, a quarter of the workforce would try and find a new job after just one error. Payroll errors can erode confidence in your workforce, so it’s paramount that errors aren’t commonplace.
So, what can your business do to prevent payroll errors?
When it comes to reducing payroll errors, one of the most important things to do is stay aware of the latest tax laws, at a federal, state and local level. Keeping an eye on any announcements from the ATO means that you won’t be caught by surprise when legislation is brought in and have to backtrack, but instead be proactive. A key example of this is Single Touch Payroll, which was introduced in 2018 and 2019. FastTrack is STP-compliant, taking the stress out of adapting payroll processes.
It’s also important to make sure that you’re documenting all payroll processes for a minimum of three years, so that auditors and regulators can receive the necessary information if there’s a dispute. Document all hourly wages, daily and weekly hours worked, total earnings, overtime pay and more. By keeping stringent records, not only will you be protected in case of audits, but also increase confidence in your payroll processes, both within your staff, and payees.
Having the right payroll software in place can go a long way to reducing payroll errors, and that’s where FastTrack can help. With payroll processing sitting within an end-to-end platform, FastTrack360 can automate processes and turn your paydays into minutes. Click here to get in touch, and learn more about how FastTrack’s platform can mean you avoid committing more payroll errors in the future.