We have been working with multiple SMBs (Small & Medium Businesses) over the years and it has come to our conclusion that most companies face the problems of payroll processing initially. When a company has only five to ten employees, dispatching payroll can be quite easy. But, when the size of a company expands and the company has more than 50 employees working, then the payroll process can get pretty challenging to be handled in-house.
Delay in your payroll process can get your employees frustrated and reduce their efficiency & morale. That’s why the world is moving towards outsourcing payroll management so that the payroll management process is handled by none other than experienced professionals. To help you understand the importance of outsourcing the payroll management process, we are sharing some of the common hindrances faced by SMBs in payroll processing.
Significant Obstacles Faced By SMBs When Processing Payroll
- The Cost
According to a professional payroll provider in the UK, one of the biggest challenges that are faced in payroll processing is the overall cost of hiring employees to perform the payroll processing task along with purchasing the payroll software & managing the same. The company has to pay not only for the employee but also for the software upgrades and other additional activities related to it – which further adds the burden.
However, one can easily mitigate this entire process by outsourcing the payroll management process.
- The Accuracy
Apart from the high management costs, one of the other concerns that must be remembered is accuracy. It’s crucial to accurately calculate and dispatch the payroll every month to your employees without fail. Moreover, if your company has freelancers (which is quite common in SMBs), then payroll must be calculated every week.
All of these jobs take time and any mistake can prove to be damaging to the company’s reputation. That’s why outsourcing the whole process matters so much.
- The Compliance
Even though the overall cost of payroll processing can easily be managed by a company, the several compliances that the company has to abide by can indeed make the method more dreadful. There are multiple laws as well as regulations that a company must follow. From PPF requirements to minimum wages – everything can turn out to be a hassle. For SMBs, it can become challenging to handle all of these things at once. One mistake and the company has to pay fines & penalties.
- The Security
When a company will be handling the payroll processing, it has to store data important to its employees. All your employee personal data, as well as account details, must be kept safe from hackers, which can become a concern, especially for SMBs. A small mistake and the company could face legal charges of data breaches.
Furthermore, since all the account details of your employees are highly sensitive, without proper security, privacy cannot be maintained because any leak can erode your employees’ trust.
And that brings us to the end of our extensive guide on the major problems faced by SMBs in payroll processing. We hope you enjoyed our write-up and for any queries, let us know.