Payroll calculations: Go automated to save time, stay in compliance

May 30, 2014 Occasional Contributors Employment/Labour Standards, HR Analytics, HR Policies and Procedures, Human Resources, Payroll, Pensions and Benefits, Privacy and Security, Source Deductions and Reporting, Wages and Compensation

Do any of you still perform manual payroll calculations or do any kind of reporting manually? I hope not. If you still are, it’s a disaster waiting to happen. An automated payroll system will significantly reduce your time and effort, and minimize or eliminate errors. Your payroll will be compliant with federal and provincial requirements, and your record-keeping capabilities will be enhanced.

Today, there are numerous payroll software and service providers, with various technologies and systems for automating payroll and reporting, time and attendance, and human capital management. You may even have a single system that can handle all of your needs on a daily, weekly, monthly and annual basis.

If you have still not embraced payroll automation and new technology, below are some key advantages to ensure accuracy and increase compliance:

Improve compliance: Payroll is mission critical. Processing payrolls manually becomes a huge burden and you run the risk of being non-compliant. Automation will improve your compliance efficiencies by doing away with manual intervention. Automating time and attendance records ensures accurate information is processed on time and enables payroll practitioners to properly calculate employees’ pay. You will no longer have to spend countless hours manually calculating statutory holiday pay or creating paper Records of Employment (ROEs).

Your automated payroll system will enable you to create ad hoc and automated reports, such as general ledger and accrual reports. This will make the monthly and year-end balancing and reconciliation process much smoother. As you think of ways to be more efficient, also consider automating benefit calculations such as life insurance, RRSP contributions and pension plan contributions.

Increase productivity and save time: Automation allows multiple options for importing, exporting, extracting and downloading important information for payroll reporting, such as time and labour, general ledger and benefit information. This means reports can be produced faster, data can be referenced more easily and records can be updated automatically.

ROEs can be sent electronically to Service Canada either via ROE web or Secured Automated Transfer (SAT).

According to the CPA’s 2012 Compliance Survey, respondents indicated that it takes an average of 34 minutes to complete a paper ROE and 22 minutes to complete an electronic ROE. Therefore, issuing ROEs electronically can lead to savings of 12 minutes per ROE.

Increase flexibility: Having an integrated payroll and HR system provides greater flexibility in the timing of reports. Gone are the countless hours trying to beat the clock to create reports for Finance and HR. Also, if you have an automated approval process in place, you will have greater flexibility regarding the timing of approvals, as well as increased security, since paper can end up lost, or worse, in the wrong hands. Managers can approve hours and employee changes through their computers, tablets or smartphones.

Reduce employer paper burden: The CPA’s 2013 national employee survey indicates that 97% of employees in Canada are paid via direct deposit, and 84% and 83% of respondents have and prefer online T4s and online statements, respectively. This is the first step to using technology to automate these payments. Providing employees with online pay statements will help your organization save time and money with reduced administration and postage costs. In addition, Service Canada reported 75% of ROEs are produced electronically, and the Canada Revenue Agency (CRA) says 74% of Canadians file their personal tax returns online. If your software has the capability to suppress the printing of payroll registers, this too will save paper and eliminate the risk of payroll records falling into the wrong hands.

Automate third party payments: Considerations should also be made to automate third party payments, such as RRSPs, Canada Savings Bonds and pensions, and process them electronically. Employees will be able to view and manage their accounts through secure employee portals or sites with the third party carriers.

If you are non-compliant, you run the risk of an audit. Furthermore, if you’re spending too much time manually entering timesheets, employee changes, processing payrolls, creating benefits reports and creating manual ROEs, it’s time you start thinking of continuous improvement and automate all of those processes.

In the past 25 years, technology has evolved to such an extent that you have the capability of doing things faster, more efficiently and securely. Use technology and automation to improve compliance, optimize your time and allocate resources to more strategic tasks.

By Janet Spence, CPM, Manager, Compliance Services and Programs
Republished with permission from the Canadian Payroll Association (CPA)
The Canadian Payroll Association’s mission is Payroll Leadership through Advocacy and Education.

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