Why you should be vigilant while selecting your Payroll provider?
Sajin Rasheed, Director
The role of payroll system is not limited to calculating wages of employees; it includes talent management capabilities that simplifies HR processes. An integrated talent management solution will have the tools and reports required to maintain compliance, including employee verification, tax compliance, minimum wage and overtime compliance and equal employment opportunity compliance.
Out of the diverse payroll services available, choosing the best one that suits your business is essential.
You need to ask the right questions while evaluating the efficacy of your payroll system.
- Money spent on payroll system
Enterprises need to analyse the size of their business and allocate a fixed budget for payroll processing. It is advisable to go for a system which offers a transparent cost per employee per month structure.
- Flexibility of payroll system
The payroll system must be flexible and compatible enough to grow with your business, to add or modify any number of salary components and to quickly adapt to new regulatory changes.
- Security of payroll system
Payroll systems store sensitive employee data including their contact details that makes it vulnerable to hacking. While evaluating payroll management systems utmost importance should be given to data protection and security and password protection of the payroll system must be ensured.
Managing a company’s payroll might seem like a simple and straightforward process. But it may not be as easy as you believe. A small mistake is all it takes to cause reputation and financial damage.
If handling the payroll of a company with a single office is this crucial and risk worthy, have you thought about companies with multiple branches spread across the globe? Multi-country payroll (MCP) comes into play here. It enables employers to manage their regional payroll operations efficiently, mitigate operational risks and overcome other challenges faced.
International payroll outsourcing enables consolidated reporting and analytics, thus providing better control and visibility of payroll operations across diverse nations. Compliance with different countries’ laws, currencies and time zones are some of the many benefits of MCP.
Why to opt for multi-country payroll?
- Unified Service
Provides with a common reporting and governance framework across all geographies that allows unified service levels.
- Standardize Process
Standardizes processes within an enterprise, ensuring a productive and efficient workforce.
- Single point of contact
Helps in maintaining a single point of contact for employees across the globe, saving a lot of time and effort.
Out of the global human resource outsourcing markets, international payroll services outsourcing is the fastest-growing. According to a study by Everest Group Research, the MCPO market has grown rapidly at a CAGR of 19-23% from 2014-2016 to cross US$1.5 billion.
There has been a significant rise in the number of businesses falling victim to fraud and turning a blind eye on the issue can only worsen the situation. Fraud by itself can be dangerous to the overall functioning of an enterprise, and if it happens to be related to payroll, the problem escalates.
Payroll fraud is theft of funds using a company’s payroll system, which is the number one source of accounting fraud and employee theft according to the Association of Certified Fraud Examiners. Employees who have access to the systems through which workers are paid can misuse their access to issue false payments.
Fraudsters misuse payroll data in a number of ways, common ones being timesheet fraud, falsifying wages, commission fraud, bonus fraud, expense reimbursement fraud, ghost employees and misclassification.
Timecard falsification and ghost employees are the two common types of payroll fraud. In timecard falsification, an employee provides inaccurate data about hours worked, leading to a miscalculation of wages. Even though it may not look as serious as stealing cash from an organization, it is equally punishable. A ghost employee is someone who is not part of an organization but is recorded on the payroll system. In such cases, the person who has ‘created’ the ghost employee collects their salary.
27 percent of all businesses fall prey to payroll fraud and it is interesting to note that smaller organizations that has an employee strength of less than 100 employees get affected more when compared to larger organizations. The occurrence is nearly double!
A sad truth about payroll fraud is that it is often long-term and many of the times it is the trusted employees of an organization who get involved in payroll fraud. By the time you realize what is going on inside your own firm, the damage would have been done.
Prior to hiring an employee who will be responsible for payroll management or who can access the bank accounts of a company, a background check on the person is mandatory. An individual with history in deceiving a company financially will tend to do so even if they switch companies. Also, reviewing payroll reports regularly to check for errors in calculations and to figure out whether any ‘ghost employee’ has been listed, is equally important.
Preventing payroll fraud is indeed a challenging task but given the massive loss it can cause to a business, employers need to be extra vigilant.
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