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20 June 2019

Employees expect their wages to be treated properly and on time. For some companies, effective, efficient and consistent payroll processing can be complex and difficult.

Among the major challenges these companies face we mention:

  1. Legislation

The legislative framework is constantly changing, which is really at the top of the list. The legal requirements for calculating taxes, social security, compliance with the grid, setting up reminders and setting up different payroll software each year.

For some companies, understanding the impact of changes and respecting of the payroll regulations can be difficult.

  1. Data Security

Payroll professionals are used to dealing with sensitive information. However, companies should be concerned about limiting access to these data outside the payroll department. The way in which this data is processed affects not only the payroll department and employees, but also the brand image of the company. Payroll professionals will have to meet high standards to protect the confidential information of employees.

  1. Fraud

Some companies are victims of wage fraud. These frauds can be committed in many forms, such as: falsification of salaries and fees, simulation of injuries for insurance claims or the creation of fictitious or duplicated employees. This risk of fraud can be more significant in absence of a strict and rigorous internal control.

  1. Manual payroll processing

For cost optimization purposes, many companies choose to process payroll internally and (semi) manually. However, (semi) manual payroll processing presents a significant risk of errors that could be a source of conflict with employees or a prosecution by the administration for non-compliance.

Due to the difficulty and challenges mentioned above and to ensure optimal and efficient payroll management, it is recommended to :

  • Hire the right people to manage payroll. The right profiles must have significant experience in payroll and a perfect expertise in tax and social legislation ;
  • Conduct a periodic payroll and social audit. The evaluation of the internal control system must be systematic ;
  • Invest in a payroll software adapted to the size of the company ;
  • An effective solution is to outsource payroll to a specialized third-party company. Effectivelly, this alternative ensures reduced costs and more controlled risks.