How to setup your payroll checklist easily?

Imagine going to the supermarket without a checklist, assuming that you have made a mental note of the items that you need to get. Upon reaching home however, you realised that you have forgotten an important item which was a top priority on your list.

The same concept applies for payroll processing. Even if your organisation outsourced payroll processing, it is imperative to have a checklist to ensure that salary calculations and disbursements are accurate. Imagine if employees find an error in their monthly salaries, they are bound to be unhappy. Fielding numerous questions around salaries from unhappy employees can be a sensitive and challenging affair.

Having a payroll checklist is crucial in pinpointing obstacles in payroll processes and creates accountability for each payroll task. Concurrently, it ensures that payroll processing is always on time without any delay in salary disbursements to employees.

Here is what a foolproof payroll checklist should look like:

Before processing starts

Before your payroll vendor starts processing the month’s payroll, it is necessary to review employees’ information as well as important salary dates. Were there any employees that had a change in address, marital status or change in job status? It is necessary to check and communicate any changes, be it in terms of employees’ information or payroll dates, to your payroll vendor to ensure that employees’ information is up-to-date before they start processing payroll.

Onboarding and offboarding employees

Calculating salaries for new hires and resigned employees can be challenging as their salaries have to be prorated accordingly. It might be helpful to ensure that your payroll vendor is aware of any new hires or resignations that happened during the month so that their salaries can be calculated accurately.

Miscellaneous adjustments

There may be instances in which employees are due to receive ad-hoc payments for the particular salary month, such as a discretionary bonus or a special incentive. As such, these miscellaneous adjustments need to be clearly communicated to your payroll vendor to ensure that they are not missed out during payroll calculations. When your payroll vendor provides you with the payroll report for review, it might be helpful if these miscellaneous adjustments are clearly indicated to allow HR to verify the legitimacy of these ad-hoc payments.

Processing timesheets

Accurate timesheets are crucial in ensuring that salaries are calculated correctly, particularly for employees who are paid on hourly-basis or are entitled to overtime payments. To avoid last minute overtime payments, it is advisable for HR to set a monthly cut-off deadline for employees to submit their timesheets. That way, it ensures consistency in calculating overtime payments and minimizes the chances of missing out on a day’s overtime pay.

Leave balance

Apart from miscellaneous payments, HR also needs to check for leave pay deductions in the payroll report. There may be employees who are on no pay leave for that particular payroll month. To help speed up the checking process, it may be helpful to have a list of employees who are on no pay leave as well as the number of days that needs to be deducted. This can then be verified with the payroll vendor to ensure that their salaries are correctly prorated.

Reviewing and closing payroll

Once your payroll vendor has completed payroll processing, HR will still need to perform a final round of checks to ensure that employees’ salaries are correctly computed and any miscellaneous adjustments, tax deductions, or leave balances are taken into account during salary calculation.

One suggestion would be to leverage on a payroll reconciliation report to check the variance of each payment item for each employee. For example, if an employee is not expected to have any changes in their monthly salaries, the variance report should show as 0.

Payroll funds

Before approving payroll, HR needs to ensure that there are sufficient funds in the company’s account to carry out the salary payments. If your payroll vendor handles the salary disbursements, it would be advisable to ensure that the amount of funds is accurately entered into the banking portal.

However, if salary disbursements are handled in-house, it may be helpful to validate the company’s beneficiary name and account number as well as employees’ bank account numbers to avoid payment rejection from the bank.

Reviewing employees’ payslips

Once the payroll report and salary disbursements are reviewed, the final item to check would be employees’ payslips. It is crucial that an employee’s payroll details and information are accurately reflected on their payslips as this serves as important documents for employees in applying for loans or work visas. Check that payroll details such as the payroll period, monthly salary figure, and any other additional payments or deductions are clearly indicated on employees’ payslips.

Payroll outsourcing to vendors like i-Admin is a great way for an organisation to free up valuable time for HR to focus on other strategic initiatives. However, there still needs to be some accountability when processing payroll and it is HR’s role to ensure that payroll is correctly computed and disbursed to employees.