So let’s say you have a brand new job. You work really hard for a couple of
weeks and then you notice your paycheck hasn’t been processed when you thought
it would be or maybe you got a promotion at work and the same thing happens. Of
course you do get paid but then you’re left wondering how does all that really work?
In this video we’re going to do a quick overview of payroll processing, to find out just how long
it takes to answer any questions you might have about where your hard earned money is.
In the U.S., the average time it takes to process payroll is five days.
Before your employees can get their paychecks, your payroll processors have to:
Input and calculate pay rate changes and overtime hours.
Withhold and file taxes. Add in new hire data.
Calculate and deduct garnishments. Gather and input time off requests.
Compute reimbursements and retro pay. And so much more!
But what factors affect payroll processing, and how can you speed it up? Let's look at
some of the most common factors affecting your payroll processing efficiency.
First, processing methods. There are three main ones:
Manual processing: This method involves
calculating payroll without the help of outside HR experts, accountants,
or payroll or accounting software. It usually takes 1-2 days to process payroll this way.
Software automation: This method uses payroll, accounting, and time-tracking software to
automatically calculate most of the payroll for you and sync it across necessary record systems.
This is the quickest method and usually only takes a few minutes to a few hours.
Outsourced: With outsourcing, you hand off processing payroll to an outside company.
Although faster than manual processes, it still takes a few hours to a day to process
payroll because you have to communicate your changes with your payroll vendor.
Don't forget to add the time it takes for your employees' paychecks to reach them. Some payment
methods are faster than others! Direct deposits, for example, only take 1-3 days, while paper
checks can take up to five days if you mail them. Second, payroll schedules. Most companies have
weekly, biweekly, semi-monthly, or monthly payroll schedules. Employers with weekly payroll
schedules typically have less time to process payroll than those with monthly schedules.
Next, payroll difficulty and workforce type. If you have to calculate various pay schemes,
like overtime, shift differentials, or commissions, the time to process will add up.
Juggling multiple worker classifications is another factor: having to pay both
regular employees and independent contractors, for example, can also make payroll processing longer.
Finally, you must follow federal, state, and local laws when processing payroll. For example,
the federal Fair Labor Standards Act (FLSA) regulates overtime and minimum wage,
but many states and local laws are stricter. Remember to research the laws in your employees'
state or country and follow them accordingly. Complying with all necessary laws can slow down
your payroll processing time significantly. So, how can you reduce the time it takes to
process payroll? Let's talk about four different ways to speed up the process.
1: Develop a routine: Developing a routine and preparing beforehand can shave hours off payroll
processing. For example, make sure everyone knows when their timesheets and paid time
off requests are due when to input new hire data, when to input new hire data, and when payday is.
2. Conduct frequent payroll audits: Payroll audits can help uncover areas in company payroll
processes that are taking up time or causing unnecessary workflow bottlenecks. For example, a
payroll audit can show employees turn in timesheet data late, causing a delay in the whole process.
3. Outsource your payroll: If your team is too small to handle the payroll processing workload,
or if your payroll processes are too complicated, consider outsourcing.
Outsourcing payroll can speed up processing and ensure you comply with all payroll and tax laws.
4. Invest in software: If you really want to speed up your payroll processing,
time-tracking and payroll software are the way to go. The right time-tracking software captures your
employees' time card data and automatically syncs it with your payroll software.
Meanwhile, your payroll software can automatically calculate the most tedious parts of payroll
processing, like tax withholdings and overtime calculations. This can reduce your payroll
processing time from days to just a few minutes. So many software solutions are available today to
help make your payroll processing more efficient. Paycom's Beti, for example,
guides employees to do their own payroll, so you and your teams barely have to lift a finger
to ensure payroll gets done accurately. So, we hope we’ve answered your questions
today. Also if you’re looking for a payroll solution you can check out this
video on top payroll solutions worldwide. https://www.youtube.com/watch?v=jCzPCL29IsM
lets get started. You can also head on over to
our website for more information on either subject and contact us directly for Technology … Advice.
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