5 simple steps to streamline your payroll process

By Vinod Gulvady
3 minute read ● April 06, 2018
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5 simple steps to streamline your payroll process

Any badly implemented process can really be disastrous for everybody. In a world that is vying for speed and accuracy in products and services, there is little or no scope for inefficiencies and lethargy. Surely, technology is one such remedy but it can prove to be a double-edged sword if not implemented or run efficiently.

In the business world too, manufacturing and service processes are getting automated in order to stay alive in this competitive environment and where cutting-edge technology seems to gain the upper hand. Internal processes within the organisations are too keen to catch up on this fever. And why wouldn’t they? Efficient systems and processes keep employees happy and in turn, happy employees bring in the moolah, don’t they?

It is no surprise then that HR too has been sucked into this technology tsunami. Technological strides have taken place in leaps and bounds where systems or services are becoming more and more efficient, much to the delight of both employers and employees. Obviously, organisations clearly see cost efficiency and resource optimization in the long run, while the employees enjoy uninterrupted efficient services.

Let us now evaluate the advantages of an automated process to manage one of the most procedure-bound, legally demanding process within HR – which is Payroll Process. Payroll process in HR requires systematic procedures to be followed and 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 and necessarily in the same order:

1. Data input gathering & validation:

Who performs this: Various stakeholders

This is foremost of all the jobs to do 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 joiners, exiting employees, salary addition, salary revisions, one-time payments 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.

RELATED: Payroll process on greytHR- Experience the difference

3. Salary register & 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

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.

Who performs this: Finance team

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.

RELATED: Your Payroll is 100% statutory compliant using greytHR

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.

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