Manage Payroll Better: How To Make Error-Free Payslips

BY Judah Hirsch Articles

Manage Payroll Better: How To Make Error-Free Payslips

Money makes the world go round, they say. Or rather, it’s the guys handing out the money that make the world go round. If you’re a business owner, that’s you to your employees. And you need to make sure the processes like salary disbursements and  issuance of payslips are error-free, or it’s not just your employees’ world stopping. It could be a major pain for your business, too.

Errors in Payroll and Payslips 

Dave is a business owner. He runs a small business that designs and sells custom shirts online. As his business grows steadily, he relies on Matt, his accountant, to keep his finances in order. One of his jobs is to make sure everyone gets their fair wages. Dave pays employees by the hour. Matt has to make sure his computations match with the log sheet. They still use manual timekeeping.

The previous payslips had many errors, with several people taxed more than once. They need fixing for this payout. Matt also has to make sure that all documents are ready for sending to the tax bureau. The deadline for that would be on the same day as the payout. That’s not a problem for Matt, he’s used to this. But one day, Matt caught some staff “buddy punching” on the log sheet.

Dave investigated, but it left the payroll in epic disarray. Matt did not know which documents he could use for payroll. Because of the problem, all the log sheets were now subject for review. The investigation was not finished on time, and so the entire payroll had to be withheld. Dave’s business had just hit a major bump in the road.

The Problem With Manual Payroll

Studies show that around 25% of businesses still use handwritten log sheets for tracking time and payroll. It is easy to see how manual calculations like these can be prone to errors. It’s not as simple as getting the hours worked times their hourly rate.

In the Philippines alone, there are many taxes and deductions that you need to learn to create payroll. All records have to be filed as well for future runs and to keep up with government needs. As soon as your business is a few years old, you’ll need to keep and store several reams of paper documents.

According to a US-based study, up to 33% of employers make payroll errors every year. As a whole, these errors cost billions of dollars. And back in 2008, a study claimed that 19% of employees admitted to “buddy punching”. This is the act of logging in for another person even though they are not there.

Payroll by itself is hard to complete, and the errors can be expensive. A business with around 20 staff can lose more than P25,000 a month due to faulty accounting techniques. This cost scales up as the company size increases.

The Solution: Payroll Automation

The payroll process isn’t limited to salary computation. It starts from when people log their time and ends with the payout safely in each employee’s hands. Thus, it isn’t enough to nudge the process a bit by using regular software such as spreadsheets.

Instead, a business needs a complete payroll system. It makes it easy to gather the numbers for each employee. A good system also helps keep HR-related documents in one place. This saves you the trouble of compiling them come tax reporting time.

You can even use the data to make business forecasts, like creating work schedules to match peak demand. It also saves you the trouble of going through filing cabinets when you need to file a record.

Also, using an automated system will free you from the problem of “buddy punching”. There are several ways you can capture the employee’s time logs. Bar codes and fingerprint scanners are the most common.

Before Automating Payroll, Learn How It Will Affect Your Business

Of course it won’t do to just buy a piece of software and run it. You have to make sure you know the impact of using it in your business.

You can start by learning about these:

  1. Your current state of payroll accounting as well as its benefits and limits.
  2. How a new system can solve your current problems, as well as how it can meet your company goals.
  3. The effect of the new system on your team, the company culture and the way they work.
  4. The things you can do to reduce any issues of the new system.
  5. The expected financial return of using the system.

What To Look For In Payroll Automation

When you have a clear plan for moving to an automated payroll system, it’s time to shop around. Low cost and handling the entire payroll process is a must, of course. Look for software with at least the following traits:

Flexible time logging options. Many firms use biometrics to log in and out, but your needs may be different. Choose a solution that supports your preferred time logging methods.

Complete documentation. Payroll disputes often occur when something is not documented in the right way. Reduce the chance of disputes by making capturing and storing all the data securely. Look for a system that also handles expense reporting, bonus computations, and automatic deductions.

Usable outputs. Opt for a system that allows you to easily create error-free payslips. It should also let you generate SSS, HDMF, BIR, and other government forms for you.

Employee dashboard. Empower your employees while reducing your HR workload. Allow employees to check their payslips online and file leaves.

Make your Payroll Processing Faster and Error-Free

After that hiccup, Dave met with his team to install a payroll system in his business. It was all smooth sailing from there, and business grew faster than ever. Employees were happier, too: no more tax problems and mistakes on payouts.

Ask us how we can make your payroll processing faster and error-free today.


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