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Payroll Process Improvement Ideas for Constructions Firms

Author: Eugenija Steponkute
Published: 15/07/2022
improve payroll process

This article is directed at the finance department and operations managers within construction firms. We will share our insights on improving payroll processes, examining how it drives profit and its overall impact on performance. If you are attempting to secure buy-in from stakeholders for new software, this piece is intended for you.

The construction industry is known for its rather intricate payroll system, as many companies employ both permanent and contract workers. There are also various fees based on tasks, locations, and other variables. Additionally, aspects such as overtime and expenses further complicate matters. In other words, the payroll process is often very complicated and, unless it is well optimised, can lead to rather disastrous consequences. 

While payroll is a core business procedure that ensures worker compensation, it is also highly susceptible to human error, primarily due to the aforementioned complexity. The good news is that there are ways to mitigate these errors by minimising human involvement in the process. If this sounds appealing, continue reading, as we will share some payroll process improvement ideas that we highly recommend you consider. 

Payroll Process Improvement Through Automation

Your best option for improving your payroll process is to adopt automation. Unlike other measures, it does not focus on just one area but can be applied across multiple steps of the procedure. Additionally, once implemented, the level of automation you have set can be easily adjusted, optimised, and expanded as you move forward.

In fact, by automating the payroll, you won’t just be improving effectiveness; you will also gain access to more in-depth data that will unlock paths to future opportunities. Additionally, it will expose redundant or underperforming areas of the process that you can address immediately. In other words, when you choose to automate the payroll process, you will be setting yourself up for endless possibilities for improvement. 

Reduce Manual Calculations

Not only do manual calculations take a considerable amount of time, but they are also highly prone to errors. When money is involved, such mistakes can be extremely costly. Logically, to minimise the risk and reclaim the hours that can be repurposed for more progress-driving tasks, it is beneficial to do less counting yourself and assign more of it to digital tools. So, how can you achieve that in payroll? 

Shift Scheduling Based on Rates, Overtime and Holidays

Although you’re not likely in charge of shift scheduling, the individual who is relies heavily on your calculations. If the schedules they’ve prepared involve numerous variables such as different rates, overtime pay, or any additional charges, calculating becomes more demanding for you. Moreover, the more complex the calculations, the greater the chance of making an error. Underpayments, overpayments, and a host of other complications may arise, along with the heightened risk that the next schedule will be equally chaotic. 

A shift scheduling software may not seem like something you would find much use for, as you won’t be working with it directly. However, it is often an inclusive feature of a larger platform. Instead of obtaining it as a stand-alone tool, aim to acquire a pay and bill software that provides it as a function. This way, you won’t need to worry about potential miscommunication between your figures and the schedules, and the complex calculations influenced by irregular schedules will be managed for you.

Employee Expenses Management

Despite the simplicity of the concept, employee expenses remain a sore point for many companies, particularly in the construction industry. From the need to purchase additional supplies mid-project to workers spending their own money on petrol to travel from one location to another, these expenses are unavoidable. The issue arises because most businesses have not structured their processes to operate effectively.

Employees are prone to losing physical receipts. Furthermore, when they accumulate too many, it takes longer to submit them. If you don’t have a digital platform, you will also have to arrange the receipts by date and the submitter manually, which, depending on the volume, can take days. This is why we recommend a designated expense management system that is easily accessible on different devices. When they have it on their phone, employees can submit expenses on the go by simply snapping a picture of the receipt. The receipt will then be stored in a web document storage that is easy to navigate using filters and to change the order of files based on name, submission date, and others. 

Automate Accounting Processes

The good news is that calculation isn’t the only area you can automate to enhance the effectiveness and performance of your payroll process. You can also apply it to accounting procedures to expedite them and improve accuracy. Moreover, this will provide you with quick, detailed reports that you can then analyse to inform your company’s future development plans.

Invoice Generation and Distribution  

Complex and irregular rates not only complicate the calculation but also the invoicing process. Moreover, the purpose of the invoice is not merely to bill the client but also to outline what they are paying for; this includes detailing the services provided and their unique rates. Assembling an invoice, depending on its level of detail and the diversity of rates or tasks, can also be a tedious and time-consuming process in which it is easy to make an error that cannot be afforded.

Most finance-related software, however, offers the service of automatic invoice generation. This means it will pull the data you input, such as employee hours, rates, etc., and crunch it into an invoice within seconds. Furthermore, depending on the solution, you can easily send it to the client without exporting the file or closing the software.  

Easy Data Transfer and Quick In-Depth Reports

Some tools also integrate with accounting packages, enabling you to send invoices to a different solution just as you’d forward them to the client. In fact, it’s a two-way connection. This means you can also effortlessly transfer data from tool to tool, thereby unlocking the ability to analyse the same data from various perspectives and in greater depth. This, in fact, also allows you to gather even more data, enriching your reports with new insights you’d otherwise lack access to.

Another positive aspect is that you won’t have to worry about extracting the new heaps of the said data manually to then compile it into a comprehensive report. This is yet another lengthy process you can automate for near-instant completion and improved accuracy. The only manual tasks for you will involve selecting the filters for the metrics you wish to gain insights on and for what time period. The rest, including visualisation for easier analysis, will be managed by the software into which you fed the data.

Why Change the Payroll Process?

While we assume you’re here because you’re dissatisfied with your company’s current payroll process, we don’t rule out the possibility that you need to present the idea to the stakeholders. We suggest you gather the figures to support your case—particularly the time the current processes consume. Then, equipped with this argument, outline other revenue-generating areas where that time could be better utilised. 

You Can’t Afford to Waste Time

You know better than anyone that time is money. When you waste it on manual tasks that can be handled by software at a greater speed, you end ultimately paying more than the cost of an automation tool subscription. In other words, while some digital platforms may seem expensive, their ROI mainly stems from the fact that they prevent financial losses in the first place. Moreover, with the human error factor removed from the equation, there is a reduced likelihood of losing money due to mistakes.

With that said, it’s also worth noting that automating payroll procedures can uncover numerous opportunities. Whether they are designed to identify ineffective and overly costly practices, areas requiring increased investment, or other aspects of the company, the reports generated from data collected through automation can assist in enhancing the business. After all, there is always room for improvement—and by automating, you are highlighting what should be addressed first. 

Key Takeaway 

There are numerous challenges that the financial departments of construction companies must overcome when managing payroll. Several variables must be taken into consideration when calculating employee compensation: location, deliverables, time rates, overtime, expenses, and many others. In other words, it can become confusing and lead to mistakes. Nevertheless, there are ways to mitigate these risks and expedite operations, while simultaneously improving overall quality. 

Automation is the best solution for improving payroll processes. It is not limited to just one procedure; it is flexible in the extent of its application and can be easily implemented across a wide range of business processes. Automating payroll saves time, enhances accuracy and provides in-depth insights. In other words, it will not only deliver ROI but will also continue to exceed expectations as you progress.

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