In assisting a broad range of international clients, Internago comes across a variety of different challenges and hurdles that cause problems in companies’ payroll management. We see many kinds of mistakes being made, from broad structural ones involving a whole organisation, to specific and detailed slip-ups which often have costly repercussions far beyond what could have been foreseen. This is even more true when it comes to international payroll.
Below, we list a number of the most common mistakes committed, so that you can be better prepared to run a labour and cost efficient payroll, as well as to know what to expect if you are considering payroll outsourcing or if you are already today looking for a new payroll partner.
Keeping an unclear payroll structure
All companies are different, and all organisations are structured in slightly different ways. This also applies to payroll management. A core function of a company, necessary to keep it running, its definition is understandably different depending on who you ask. For some, the term payroll can simply refer to the act of effecting salary payouts on a monthly basis. For many, payroll also defines key employee data necessary to run the salary payouts, including a calendar of transactions, etc. Yet, others also include the full work that goes into reviewing and keeping up-to-date with employers’ tax and social security obligations in the given legal framework one operates in, including company register and employer register obligations, etc. Regardless of your organization’s specific definition of payrolling or payroll management, it is paramount that this, from the very beginning, is clearly determined, standardized and well communicated throughout your organisation.
Failing to keep complete or up-to-date employee records as part of your payroll management
Most legislative environments require employers to keep a backlog of payroll records, sometimes several years’ worth. Some even require specific details like hours reported and payroll dates. So not only is it wise to keep a well-organized and easy-to-adjust system of such data for the sake of one’s own efficiency, but local tax authorities’ future inspections might very likely expect the same.
Keeping your employees from doing the job you’ve hired them to do
We’ve all been there: something seems amiss with your salary pay-out, your holiday pay wasn’t received as expected, or perhaps your salary was paid out late, or not at all! When this happens even the most loyal and motivated employees get frustrated, and decide to prioritise their own needs before those of their employer. This is only natural. Every such hick-up, where the employee themselves are forced to take the initiative and find the erring link in the chain is a waste of time and resources. It may even lead to lost business. If your payroll system is inefficient, or ad-hoc, it will inevitably rely on the employees’ own engagement from time to time to make it right. This may be an invisible problem that continuously occurs without your organisation’s management ever being made aware. There are no shortcuts to right this issue – a reliable and consistent payroll has to be established as soon as possible.
Managing your payroll alone
Today, efficient tools exist to take away many of the above headaches. If your organisation’s payroll is handled completely internally, and perhaps even by a single person (you’d be surprised how often we hear about this), you are creating unnecessary risks. Not only are you committing yourself to keeping up with all legal updates with regards to employer obligations, but you have no back-up should the one employee with payroll competence fall ill, or leave your organisation for other reasons. A strong recommendation, in order to ensure business continuity, is payroll outsourcing or payroll consulting.
Do you want more information or need help with employment and payroll ?
Internago can assist with cost calculations and full payroll service on most European markets. Please click here to find more information, or if you prefer contact us directly at info@internago.com
Disclaimer
Please note that this blog post only gives an overview and provides some introductory examples to payroll. In practice, there are more detailed aspects to consider, which is why this blog post should only be seen as a general guide. For a more in-depth discussion, do not hesitate to contact us at info@internago.com