Do you pay your employees on time? Great! Your payroll process must run like clockwork. Right?
Hmmm…
Unfortunately, there’s more to it than that. In fact, payroll processing is likely one of the most complicated tasks of your entire business.
These complications include employee benefits, compliance, and tax regulations. Yes, of course - mistakes in these areas can be costly. But they can also ruin the timing and accuracy of your payroll system.
Running payroll manually is particularly risky. But there’s another way - payroll software reduces the odds of human error. So that would be a great place to start.
Regardless, there are numerous risks you want to avoid when running payroll. In this blog post, we’ll explore several of the key risks involved.
5 Payroll Risks You Should Be Aware of
Payroll risk factors are a reality, regardless of the size of your company or industry. Here are five of the most common risks to be aware of when running payroll.
Timekeeping Fraud
Our first payroll risk assessment example starts with the employee. Manual timekeeping, remote working, and a lack of direct supervision could result in your staff exaggerating their billable hours worked when filling in their timesheets.
Security Breaches
Payroll holds such sensitive data as KYC (Know Your Customer) documents, bank account information, and tax identification. Unsophisticated cyberattacks or lax security could lead to salary data leaks.
These data leaks could put your employees at risk of financial fraud or identity theft. It could also see payroll transactions routed to the wrong accounts.
Data Loss
If you store enterprise payroll data on individual devices or in physical documents, there’s a high chance of data loss, corruption, or damage. Enterprises are required to store payroll data securely with disaster recovery methods and sufficient backups for specific periods.
Fraudulent Expense Claims
These occur when an employee claims reimbursements for inflated or made-up expenses or claims personal spending as business expenses. They may also claim out-of-policy expense reimbursement or submit duplicate claims, either by intent or error.
Compliance Errors
Our final risk assessment example is more on the legal side of things. Payroll includes tax calculations and complying with labour laws like pension schemes.
Rules change as government policies do. So yes, your payroll process must fall in line with changes in policy in order to avoid litigation and penalties.
Conclusion
Ideally, your payroll will run in the background so your HR team can focus on other tasks, and you can concentrate on building revenue. A part of making this happen, however, is being aware of the risks involved in payroll processing and having the necessary tools in place to mitigate them.
Some of the consequences of not confronting payroll risks include business interruptions, reputational damage, and costly penalties.
Correct payroll risk management will ensure you’re complying with legal obligations and are implementing a system that enables your staff to be paid on time and correctly, both of which are essential for your business’s continued success.
Onfolk’s free risk assessment tool will help you evaluate your payroll risk level. It will tell you what you’re currently doing right, which is always useful to know. I will also tell you what you can do to help avoid some of the graver consequences of payroll risk.
Other valuable features of our free resource include advising you on who’s responsible for each recommended action. This will allow you to coordinate your new payroll strategy with your team. Download our risk assessment tool now and begin reducing your payroll risk immediately.
Do you pay your employees on time? Great! Your payroll process must run like clockwork. Right?
Hmmm…
Unfortunately, there’s more to it than that. In fact, payroll processing is likely one of the most complicated tasks of your entire business.
These complications include employee benefits, compliance, and tax regulations. Yes, of course - mistakes in these areas can be costly. But they can also ruin the timing and accuracy of your payroll system.
Running payroll manually is particularly risky. But there’s another way - payroll software reduces the odds of human error. So that would be a great place to start.
Regardless, there are numerous risks you want to avoid when running payroll. In this blog post, we’ll explore several of the key risks involved.
5 Payroll Risks You Should Be Aware of
Payroll risk factors are a reality, regardless of the size of your company or industry. Here are five of the most common risks to be aware of when running payroll.
Timekeeping Fraud
Our first payroll risk assessment example starts with the employee. Manual timekeeping, remote working, and a lack of direct supervision could result in your staff exaggerating their billable hours worked when filling in their timesheets.
Security Breaches
Payroll holds such sensitive data as KYC (Know Your Customer) documents, bank account information, and tax identification. Unsophisticated cyberattacks or lax security could lead to salary data leaks.
These data leaks could put your employees at risk of financial fraud or identity theft. It could also see payroll transactions routed to the wrong accounts.
Data Loss
If you store enterprise payroll data on individual devices or in physical documents, there’s a high chance of data loss, corruption, or damage. Enterprises are required to store payroll data securely with disaster recovery methods and sufficient backups for specific periods.
Fraudulent Expense Claims
These occur when an employee claims reimbursements for inflated or made-up expenses or claims personal spending as business expenses. They may also claim out-of-policy expense reimbursement or submit duplicate claims, either by intent or error.
Compliance Errors
Our final risk assessment example is more on the legal side of things. Payroll includes tax calculations and complying with labour laws like pension schemes.
Rules change as government policies do. So yes, your payroll process must fall in line with changes in policy in order to avoid litigation and penalties.
Conclusion
Ideally, your payroll will run in the background so your HR team can focus on other tasks, and you can concentrate on building revenue. A part of making this happen, however, is being aware of the risks involved in payroll processing and having the necessary tools in place to mitigate them.
Some of the consequences of not confronting payroll risks include business interruptions, reputational damage, and costly penalties.
Correct payroll risk management will ensure you’re complying with legal obligations and are implementing a system that enables your staff to be paid on time and correctly, both of which are essential for your business’s continued success.
Onfolk’s free risk assessment tool will help you evaluate your payroll risk level. It will tell you what you’re currently doing right, which is always useful to know. I will also tell you what you can do to help avoid some of the graver consequences of payroll risk.
Other valuable features of our free resource include advising you on who’s responsible for each recommended action. This will allow you to coordinate your new payroll strategy with your team. Download our risk assessment tool now and begin reducing your payroll risk immediately.
