Payroll is one of the most important tasks for any Human Resource (HR) department. It requires accuracy and must meet the deadline, always, every time. Late payment of dues or salary can lead to a high attrition rate and employee turnover rate.  Employee satisfaction, to an extent, depends on the payroll management services.

In a world that is vying for speed, accuracy and precision in products and services, there is little or no scope for inefficiencies and lethargy. Technological strides have taken place in leaps and bounds where systems and services are becoming more efficient and automated, much to the delight of both employers and employees. Organisations clearly see cost efficiency and resource optimisation in the long run, while the employees enjoy uninterrupted efficient services. Technology is certainly an enabler to streamline payroll processing, but it can prove to be a double-edged sword if not implemented or run efficiently.

Let us now evaluate the advantages of an automated process to manage one of the most procedure-bound processes within HR – which is the payroll process. Payroll process in HR requires systematic procedures to be followed in a time-bound manner. Only a well-implemented software will support such a requirement.

Typically, the payroll process in India is split into the following set procedures, necessarily in the same order:

1. Data input gathering and validation 

Who performs this? Various stakeholders

This is foremost of all the steps in a payroll function. Payroll inputs will be sent by various authorised stakeholders to payroll department for further processing. Broadly, the types of inputs would be new joinees, exiting employees, salary addition, salary revisions, one-time payments like reimbursements and or deductions.

Who performs this? Payroll team

Firstly, it is necessary to check for any company policy or statutory changes that may impact payroll so as to be able to tweak the software configuration accordingly. Secondly, once all inputs are received, validate the same to ensure data is properly authorised or if it is in accordance with company policies or government regulations. Additionally, this will also help to check if all inputs are properly submitted in the system in the right modules.

2. Processing

Who performs this? Payroll system

Once the inputs are all submitted and checked, it is now time to process the salary in the system. The system will now generate the gross and net pay of each employee based on the data provided. It will also deduct and withhold relevant taxes and deductions according to the earnings of each employee.

3. Salary register and verification

Who performs this? Payroll team

With the processing completed, perform a check and balance activity to verify if the pay results are accurate. Firstly, generate a salary register through the system. It is a statement of all pay elements and deductions made to employees individually. There are many methods to verify a salary register for accuracy and the most common one is the variance report between previous month and this month’s pay results. Evaluate each and every large variance and be fully satisfied before proceeding to the next steps. The second crucial check is the head count reconciliation to ensure the right people are paid.

4. Bank file, accounting, reports generation

Who performs this? Payroll team and finance team

This is the first step in the post-payroll activities. Generate the bank file from the system. A bank file contains a statement of net pay by individual employee, along with their personal bank details. The total of the bank file must match with the net pay total in the pay register. The file needs to be sent to the bank for further disbursements to employees' bank accounts.

Next, generate the journal vouchers from the system and send it to your Finance and Accounting (F&A) team. With this report, they will ensure proper funds are available in the bank account for salary disbursements and statutory payments. Simultaneously, they will be able to pass necessary entries in the books of accounts to account for the salary costs and liabilities.   

Who performs this? Payroll team

Most companies have their individual set of payroll reports that need to be generated and published to stakeholders. Examples are: head count report, salary cost summary, expense and overtime reports, statutory reports, employee demographic reports, attendance reports, etc. The system can be configured appropriately to generate such reports or any such adhoc reports as and when desired.

5. Statutory compliance

Who performs this? Payroll team

Finally, the statutory withholdings have to be remitted to the government agencies respectively along with the necessary returns or detailed workings. The system will generate individual reports to enable the payroll team to use the same. Additionally, the system can be linked to the government portals to be able to pay online or generate receipts and to submit the returns electronically. As a last step, the payroll for the month can be locked to prevent any further changes or inputs to the data. With this, it concludes the payroll activities for the month.

What is expense claim?

Usually organisations reimburse the expenses incurred for employees towards business operations. Travel, accommodation expense, money spent on dining, customer visit expenses, parking expense etc. are some typical examples of such expenses. In all cases, a claim submission with a proof of spending is necessary to reimburse the money and complete the claim process.

Based on the nature and size of business, the scope of expense claim can range from simple to complex.

How to streamline reimbursements?

1. Form a policy for the expense reimbursement process

Determine an easy-to-follow and clearly explained expense reimbursement policy to distribute and communicate internally to your employees. The important details that should be addressed and defined include the expenses eligible for reimbursement, the guidelines for how claims should be submitted, and the time frame for the issuing of payments.

If employees need pre-approval on purchases made on behalf of the organisation, make that explicitly known. It’s in both parties' best interest to be as detailed as possible in your policy in order to avoid a situation in which an employee, using their own discretion to decide what is an allowable expense, has their reimbursement claim denied once it’s discovered the expense is not covered within the scope of the company policy.

As well, within your policy, provide a point of contact in case employees have any questions or concerns.

2. Determine what expenses employees can claim

Set clear rules in place on what purchases qualify as valid expense claims. Eligible reimbursements typically include travel and accommodation, office supplies, cellular phone charges, and costs for entertaining clients. Employee perks, such as transit passes and fitness memberships, may be offered to employees as company benefits; if so, it is advisable to communicate how much is covered by the employer, from a partial subsidy to a full reimbursement.

3. Create a system for collecting employee expense claims

An expense reimbursement claim report should be filed and completed by the employee and submitted to their HR department for approval after the costs have been incurred. As per your company’s policy guidelines, communicate what information is needed when submitting expense claims and reports. Information that should be reported includes the total amount of the purchase, the date of the purchase, the name of the seller/supplier, and a description of the goods and services bought.

Additionally, it’s crucial for employees to provide their records supporting the claim to the company for review and approval. Records that are permissible include receipts, invoices, credit card statements, ticket stubs, and vehicle logs. To keep things organised, establish a centralised system for submitting expenses, including the processes for uploading and sending in their proof of payment, whether in physical form or by scanning a copy of their bills.

Keep the process as simple, streamlined, and digitised as possible to reduce the amount of time your employees spend on sending in their expense submissions.

4. Verify the legitimacy of expenses

Set and communicate deadlines for expense report submissions, such as submitting claims at least a week before the forthcoming pay date in order for the employee to receive approval for their claims and see their reimbursement in that pay cycle. Give yourself enough time to review the expense reports and make sure they comply with the policy guidelines. This way, you can consult with the employee if there is any missing or incomplete documentation, expenses outside of the policy, and other discrepancies.

5. Pay reimbursements within a specified timeframe

Let employees know when they will see the payment from the company. Institute a clear and transparent process communicating the expected schedule for expense reimbursement. Communicate how they will receive the payment — whether it’s via direct deposit or cheque — as well as how they will see recorded confirmation of the payment made (such as a statement on their paycheque) for their reference. An online payroll solution can assist you with completing this step with ease.

When it comes to paying employees, transparency in the process is important to keep things running smoothly. You can easily prevent frustration caused by late payments by processing reimbursements timely and reliably. If your staff is paying out of their own pockets and are not paid back sooner rather than later, it can cause unnecessary ill feelings towards your company. You can have a positive effect on the employee experience through how you handle reimbursements — doing it well, reflects back on you as a respectable and considerate employer that cares about their people.

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