The Hidden Costs of Payroll Errors: How to Mitigate Risks and Improve Efficiency

Payroll is the backbone of every organization. It is the lifeblood of every employee, and it is a crucial component in maintaining the financial health of any company. However, despite its importance, payroll is often taken for granted until something goes wrong.

A recent report by Ernst & Young (EY) found that 1 in 5 payrolls contain errors, costing businesses an average of $291 per mistake. These errors not only result in financial losses but also steal valuable time from HR and payroll professionals. In fact, common errors alone can take up to 29 weeks, or over half a year, to correct.
 

The consequences of payroll errors go beyond financial losses and wasted time. Non-compliance with payroll regulations can result in fines up to $100,000 per year and can even lead to turnover.

To ensure accuracy in payroll, companies need to adopt proper pre-payment practices. ADP's Rachele Collins recommends checkpoints to foster accuracy and ensure a strong process, in her article, Proper Pre-Payment Practices: Validating Your Payroll. Also read The Real Cost Of Payroll Errors And How To Avoid Them to learn how HR professionals can also leverage HR tech to mitigate payroll errors and invest more time in higher-reaching goals and initiatives.

Choosing the right HR technologies is crucial in ensuring accurate and efficient payroll processing. In his article, Brett Farmiloe outlines the 8 Important Factors To Consider When Choosing HR Technologies In 2023. Moreover, Tal Clark highlights the importance of Earned Wage Access (as) The Missing Link In Workplace Wellness Programs.

In conclusion, payroll accuracy is not something to be taken lightly. It is a critical aspect of any organization, and every effort must be made to ensure its accuracy. By adopting best practices and leveraging HR technologies, companies can prevent payroll errors and invest more time and resources in achieving their organizational goals.

We hope, this edition of HRIS & Payroll Excellence will help you achieve excellence in your core HR and payroll processes.

Happy Reading!