How to implement a successful remote payroll management practice

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Studies show that as many as 40 million people just in the US will make work from home regular. The remote workforce number will only increase if we consider globally. With most of your employees working remotely, it’s important for the payroll team to always be in sync.

The switch from working from the office to working from home might look straightforward, but there could be several complications that go overlooked. These can include the tools you are using, the environment, rules, norms, culture, or even the way you communicate within the team.

While your business goes through the sea of changes related to switching to remote work, getting payroll done on time is vital. Delayed payroll operations could affect your employees’ morale and your organization’s brand, and sometimes it could be the ultimate reason your employees leave the organization.

With the proper preparation, you can ace remote payroll management and continue to deliver timely paychecks. In this article, we will go through a practical checklist that payroll professionals can start adopting immediately to ensure a smooth transition to working from home.

Implementing remote payroll management

Cross-train your payroll staff

When your team is working from different locations, the last thing you need is to be dependent on one person to complete a crucial task. A more streamlined approach would be to cross-train your employees to perform business-critical payroll operations independently. It would be ideal if all your team members were well-versed in basic activities such as gathering new hire information, understanding employee exit regulations and processes, verifying tax deductions based on statutory compliances, generating necessary bank files, and knowing the deadline to stop collecting payroll inputs in order to run payroll on time. Cross-training employees empowers them to do multiple jobs and shift gears to support each other as needed.

Plan your input collection process

In most organizations, the input collection process is stopped a week before payday to validate the submissions and make adjustments if necessary. Under remote work circumstances, you may want to give the input validation team more time for verification. When working from home, the communication between the employees submitting time and the team collecting this data might not necessarily be as swift as within the office. In order to help you organize the process, here’s a high-level breakdown of the input collection phase.

Activities involved with input collection:

Notifying relevant stakeholders

  • Start by communicating your new deadlines to the other department heads because of remote work.

  • Notify your employees about collecting proofs of investments, reimbursements, or FBP within the first two weeks of the month.

Collecting input on employees

  • Get the employee headcount absolutely right. Ensure to include existing employees, lateral hires, and everyone who has to receive compensation.

  • Gather information from the HR team on employee pay hikes, promotions, and revised pay structures for the month.

  • If it’s your high profit season, get in touch with the finance team to factor in performance bonuses or one-time incentives.

Dues, deductions, and withholdings

  • Account for salary arrears to be processed for existing employees.

  • Factor in loans provided to employees and recovery deductions.

  • Collect reimbursement bills from employees to make appropriate payments on incurred expenses.

  • Validate and include submitted employee proofs to reduce taxable income.

Work hours (overtime, LOP, paid time off, leave)

  • Collect employee timesheets to validate work hours.

  • Include multiple shift allowances, LOP, and overtime hours.

Schedule when to execute the process

 Week 1

  • Notify the relevant stakeholders

  • Get in touch with relevant teams to gather input on employees.

  • Send out notifications to submit information on dues and deductions to respective departments.

  • Send out notifications on collecting withholding inputs from employees.

Week 2

  • Remind departments to submit information on dues and deductions.

  • Remind your employees to submit withholding information.

  • Validate the inputs received from week 1.

 Week 3

  • Validate the information obtained from week 2.

  • Verify employee leave and attendance data.

  • Freeze the input collection process and send the data to the processing team so they can run payroll.

This practice will help ensure that you are not missing out on any input, but at the same time, it will give teams sufficient time to respond to your request.

Monitor the leave and attendance report regularly

Leave and attendance data allows the payroll team to calculate how much to pay absent employees. If employees are working from home, they aren’t checking in or checking out at the office premises anymore. This makes communication between HR and the payroll team even more important. Both teams need to stay informed of:

  • Any updates or changes made to leave policies, like daily updates or mandating leave applications.

  • New ways of capturing attendance data, like remote check-ins.

  • Updates to office working hours for hourly employees.

  • Attendance trends as remote work continues over time.

Encourage staff to keep up with statutory regulations

Remote payroll management or not, staying on top of statutory compliance is a must to process payroll accurately. State-wide regulation changes, budget updates, interim announcements, and tax-filing deadline relaxations are just some government updates that can slip under the radar. These updates can favor the employer, the employees, or sometimes both. If the entire team is given the responsibility to monitor the changes consistently, the payroll team can help the business maintain a spotless compliance record.

Delegate authority of approval to more than one person

We stressed the importance of cross-training your payroll staff to reduce dependency. Similarly, it’s always good to have additional people with the right level of authority to ensure the approvals get done on time. Ensure availability of key stakeholders such as fund approvers, payroll authorizers, accounting personnel, statutory compliance teams, and more during the time of releasing and approving payroll. If they’re not available, ensure that a person with equal authority is. Payroll teams and banks work hand in hand, too. Authorities in the bank should also be notified about the additional level of authority given to some of the employees in your payroll team so they can process requests from them.

A backup plan to remote payroll management

If you are unable to process employee payroll on time, your brand reputation takes a massive hit—not to mention other legal consequences that might follow. In your Business Continuity Plan, find space for a standard operating procedure on how employees will be paid when you are unable to make the deadline. Look for arrangements with banks to process pay amounts based on the previous month’s salary file or direct deposit records. Clearly document the scenarios and communicate the procedure to the authorities involved in processing payroll on time.

Choose an effective online payroll management system

The increasing trend toward remote work was captured in a recent survey published by Hubspot. If your payroll department is also adapting to remote work, now might be a good time to consider switching to an online payroll management system. Any good payroll software can give you accuracy, but cloud-based payroll software can help your payroll teams adapt faster to remote work.

These systems give you the luxury of accessing payroll information from anywhere. They can adapt to working hour or leave policy changes effortlessly as compared to on-premises systems. Payroll admins can collect IT declarations and investment proofs online without having to go through endless reimbursement forms. You can encourage inter-department collaboration between payroll, HR, and the finance team without compromising on security.

You can also automate post payroll activities such as distributing payslips and tax worksheets, generating pre-formatted reports to accelerate the tax filing process, and accounting for payroll expenses in your books. Most importantly, these systems allow you to take your payroll operations online almost instantly without investing in any system infrastructure.

The way forward

Switching to remote payroll management can look challenging, but it’s the need of the hour and today’s technology makes it possible. With a bit of planning, you can organize all your payroll processing operations from home. By cross-training your payroll staff, getting your team accustomed to the new way of work, planning your input collection phase, and supporting your organized process with a good payroll management system, you can streamline your remote payroll management process. Not only does online payroll software help you adapt to remote payroll processing quickly, but it can also help you future-proof your payroll operations for at least the next decade.

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