Human error in payroll is a significant challenge and can cost companies millions. Fortunately, in addition to systems that help administrators and managers to prevent errors, there are processes that can be put in place to reduce the risk, say payroll experts at Accsys.Johannesburg-based Accsys is a member of the Business Connexion Group (BCX) and national supplier of people management software and hardware solutions within the HR, payroll and time & attendance space.

CEO Teryl Schroenn says the first priority is to have realistic and practical deadlines in place. It is crucial to have open discussions with all role players when setting deadlines in order to secure everyone’s buy-in and commitment to the process and ensure that everyone understands the implications of missing deadlines.

“A key success factor is that the contributors are aware that they need to inform the payroll department timeously if they can’t hit a deadline, so that alternative arrangements can be made. It is amazing how many people think that it is okay if they miss a deadline once, not being aware that if there are 20 deadline contributors who do that once each year; then you have a very difficult scenario on your hands,” says Schroenn.

The use of standard formats also reduces risk and makes processing easier. Every form has to have critical information, including employee number, name and document purpose, in the same place. This makes it easier for Payroll Administrators (PA) to see who and what needs to be processed.

Controls that confirm all the data is processed correctly is also necessary. “Many companies moved from batch processing to “live” online models, but did not carry over the controls that made batch processing low risk. Input data should be checked by somebody other than the data capturer, too,” Schroenn continues.

Data security and balance

Larger companies conduct backups on data and systems at regular intervals, but this does not always happen at departmental level and, particularly within smaller businesses, the payroll department is neglected in terms of this important step in the security and protection of company data.

Schroenn says that backups should be conducted daily in payroll, and more often when there is a heavy capturing load.

It is more often than not that mistakes tend to occur during periods of high volume/ heavy capturing – such as the end of a financial year, budget or tax season.

“Balancing monthly, quarterly, year to date, in a structured way, can also help prevent year end pressure. One of the challenges of keeping a payroll constantly in balance goes back to the first point around deadlines. A balanced payroll that needs to have a last minute change can create problems, because processes need to be redone, and this is when errors creep in.

“In order to assist with this, we have placed a payroll shield in our software, under the control of the PA, which allows continued processing, particularly useful in an integrated Payroll and HR system, with no impact on the completed payroll before EFTs, unless the PA un-shields,” adds Schroenn.

Another process to incorporate, one of strategic importance, is sign off from the relevant line management, supervisors and the PA/ financial manager.

The reason for this is because it positions another check system in place, so all work is checked and re-checked to ensure accuracy. As Accsys management explains, it is human nature to be that much more careful when one is aware that work will be checked and scrutinised.

All these steps, adopted and implemented effectively, will go a long way to ensure a quick but hassle-free and accurate payroll process.