What is payroll?
Payroll is an essential part of every business but does this function fit better in tandem with human resources or should it reside in accounting?
Considering that payroll involves aspects of both HR and finance, the answer to this question is not straightforward and will depend on the structure of your company.
Let’s take a look at the structure of payroll and HR and see how these two elements of your business can be synergised for enhanced efficiency with an outsourced payroll solution.
Payroll is about more than just the numbers
From a strict accounting point of view, payroll is the process of calculating and verifying the amount of money that each of your employees should be paid in a given period – typically every two weeks or monthly – and ensuring that any necessary deductions take place before salaries and wages are paid out.
While nobody would argue with this definition, it does leave out an essential component of payroll: the process of dealing with employees and discussing their wages and salaries in a constructive manner. This is crucial for your HR strategy and will help you retain the best talent.
- HR related issues like absenteeism, sick leave, requests for bonuses and salary increases, and disciplinary action resulting in salary cuts all need to be communicated effectively to your payroll administrator.
- Similarly, payment errors that result in employees receiving the wrong amount of money also need to be addressed in a constructive and professional manner in order to maintain a happy and motivated team.
Are HR professionals equipped to handle payroll?
Payroll management may include human resources aspects, but that doesn’t mean that an HR manager can carry out this important financial administration role.
- Payroll is an aspect of your business where transactions need to be recorded with total accuracy by a trained financial administrator.
- It would be unfair to burden your HR staff with this responsibility which could result in material misstatement on your company’s financial statements.
- This in turn would have implications for the effectiveness of your financial management and tax compliance.
Outsourced payroll solutions combine accounting and HR seamlessly
The fine balancing act between human resources and accounting that takes place when payroll is calculated requires an expert team with the knowledge of those areas of specialisation.
Whilst there is undoubtedly an overlap in the functions of HR and payroll, ultimately, these two departments take different approaches and serve different functions when it comes to solving the various issues. To avoid complex company structuring that adds to your admin bill and may demand too much of your own time, outsourcing your payroll could be an optimal strategy.
- An outsourced payroll solution like the one offered by Bletchleys, gives you access to experienced payroll administrators along with a team of financial consultants who can synergise with your HR manager to solve pressing staffing issues.
- An outsourced payroll solution which can be coupled with your existing HR department could be the best solution for any business looking to attract and keep talent and minimise the administrative burden of dealing with the salaries and wages on a monthly basis.