Major Challenges Payroll Managers Face

A payroll manager is someone who keeps track of the list of all the employees who are entitled to receive payments as well as other work benefits and the amount each one of these employees should receive for the time worked or the tasks performed.

Processing payroll is the most difficult and complex yet most important task that a company has to follow. One small error can cost the company expensive damages. Hence, the payroll manager has to be aware of all the problems occurring in the payroll process. Keeping track and identifying these small mistakes and nullifying them, is actually a time-consuming and difficult task.

Here are some common problems faced by payroll managers when they are processing payroll;

Management of Timesheets

Managing employees’ daily presence is not an easy task for payroll managers. Most employees are working in different locations, in different cities or districts all around the country. One small error or misinterpretation during data entry can cause underpaying or overpaying of an employee.

Payroll managers have to keep track of employees that are not available due to leave or employees that work additional hours on weekends or on holidays. This requires effective planning and optimum productivity or else it becomes almost impossible for the manager to process the timesheets with 100% accuracy.

They have to be extra careful because problems occurring in payroll processing can lead to complex legal issues if an employee ends up getting underpaid. This problem can be avoided by using document management technology customized according to the company’s specific needs.

Misclassification of Employees

Payroll managers have to treat every employee separately. Independent contractors, temporary employees, or freelancers are not considered permanent employees when it comes to payroll. This is what makes management of payroll even more difficult because misclassification of employees can result in heavy fines and other administrative issues.

To avoid this issue, payroll managers usually categorize employees based on their eligibility for payroll benefits, tax withholds, or other specifications when they are hired. Moreover, tax rules are different for different states making it harder.

Managing Personnel Files

Payroll processing is based on documents like labor agreements, addendums, personal deduction declarations, and employees’ healthcare insurances or personal statements. Payroll managers have to manage these documents in an efficient and easy-to-access manner.

To make things a little easy, there are payroll software programs available that have all human resources and payroll functions integrated into them. Payroll managers can set up automatic e-mail or SMS alerts notifying the employees about their incomplete files or expiring documents using such tools. Netchex is an example of such online payroll software program.

Processing Payroll on Time

Payroll managers have to manage and update payroll accurately and on time or else the employees become angry and unhappy when they don’t receive payment on time. It’s even more difficult for small organizations that are managing payrolls in-house.

Again the use of payroll software solutions can come in handy here. The use of such a tool can complete the all-important task of calculating salaries in minutes. The system will do all the calculations for you as you will only be required to enter the relevant data.

Keeping Up to Date

Most people see payroll as an old-fashioned and outdated business function. As the world is constantly changing with respect to innovation and technology, payroll managers often struggle to stay up to date with current trends. But technology can actually help payroll managers cut costs, save time, and improve efficiency.

Real Time Information

The biggest change to payroll processing is probably the requirement for payroll managers to submit records each time they pay employees. Before this, they were only required to submit records annually at year end. To deal with this issue, payroll managers usually use RTI compliant payroll software or RTI compliant outsourcing partners. RTI support options help payroll managers through the transitions and give them the best possible advantages.

In conclusion, having awareness of all the problems faced by payroll managers would help avoid mistakes in the first place and result in maintaining a smooth payroll process.


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