What Are the Challenges Faced by the Payroll Accounting Team?
Payroll processing is one of the tedious tasks which are performed by every kind of businesses irrespective of their nature or size. It is not only a time consuming process but it is one of the most intricate processes. Mostly the firms allocate such processes to the HR department or the finance department, in order to reduce the costs but it usually results in inefficiency as the HR or finance departments may not have the adequate training and experience in the field of payroll accounting and processing. Some of the common challenges faced by the payroll accounting team are listed below:
1.Conventional payroll system
Conventional or traditional payroll processing mainly focuses on manual payroll systems. It includes a great deal of paper work and it is more tiresome. The employee data also becomes vulnerable to errors and frauds and it also becomes difficult to share any kind of reports and information within the organization. The backup of such data and information also cannot be maintained.
2.Non- compliance with laws and rules
It is very crucial for every business entity to remain complied with the rules and regulations of the land. The persons who deal with the payroll system must be aware of the tax laws and all kinds of employee regulations so that they can calculate the salaries and wages on that basis. They must also remain updated regarding the changes made with regards to the laws. A slight negligence will result in a large amount of penalties and fines. Hence, non compliance is a crucial challenge.
3.Confidentiality and privacy issues
Data-breach is one of the most common challenges faced by organizations. Payroll process includes a lot of crucial information regarding employees like their personal information such as bank account details etc. Any kind of data-breach may affect the business drastically and it may result in payroll frauds, financial malpractices etc. In order to avoid such data leaks the organization must adopt strict privacy policies and limit the number of person’s access to such information.
4.Delay in making payments
Payroll processing consumes a big chunk of time as it requires a high level of accuracy and error-less calculations. Many firms may face the challenge of delay in making the payments to the employees. It is mainly due to the manual payroll process and non- specialized persons who are appointed to perform such tasks. Delay in payments may affect the morale of the employees and sometimes it may reduce their motivation also.
5.Increasing burden on finance department
As stated before most organizations don't have separate payroll departments or teams who are specialized in payroll systems. They mainly entrust these tasks to the HR department or the finance department who are basically engaged in their primary duties. When they are entrusted with the payroll processes, they may not be able to carry out or execute any activities in an efficient manner, and may feel pressured to perform the tasks in which they do not have basic experience or training and, hence payroll processes may not be conducted accurately.
How can a firm tackle these challenges?
ABC ltd. was one of the manufacturing companies in the UAE. It always focused on producing quality goods at cheap rates and providing personalized customer services. The main aim of the company was to acquire adequate profits along with fulfilling customer satisfaction. At the initial stage of the business they were having a smooth cash flow without any disruptions. But later on they started to face a big challenge of employee turnover, reduction in their performance standards and increase in penalties and fines.
When the company conducted a thorough investigation to identify the root cause of such issues, it realized that the payroll system which was followed by the company was not so efficient and accurate due to which the employees were receiving their payment late and the tax deductions made were also inappropriate, this resulted to the decrease in employee, morale and increase in employee turnover. The company then decided to tackle the problem by outsourcing the payroll service through which it could be relieved from the burden of payroll process and reduce the cost. Due to outsourcing the payroll service the company was now able to focus on its primary objective to provide better quality goods.
From the above case study it is very evident that outsourcing payroll services is the most efficient and cost-effective strategy which can be adopted by the firms to face the above said challenges. Outsourcing payroll services not only reduces the cost but it also ensures accurate calculations and compliance with the laws and regulations of the land.
How can CDA help?
In Dubai, most of the companies prefer outsourcing their payroll services to external institutions that are trained and experienced in dealing with the paychecks and calculations relating to it. The companies can approach CDA for better payroll service in Dubai in a personalized manner. The CDA along with their professionalized and dedicated team perform the tasks in an efficient way, they have all the potential to fulfill the tasks of their client. CDA is the team of professionals with modern potential which makes it an absolute service provider for the leading companies in Dubai.