Four payroll errors that a new HRMS can eliminate

Payroll errors can be a hassle to find and a headache to clean up. They cause stress to employees and are a source of frustration for your payroll and HR teams. A new HRMS will help to alleviate these issues by eliminating payroll errors. Here are four areas where a new HRMS can improve error prone situations.

1. Phantom employees

Unfortunately the scenario of an employee who never starts but receives paychecks is not a myth. One of the key areas where a new HRMS helps to block this situation is through enhanced and increased visibility. The current generation of HRMS allow for configurable workflow so it’s easier to build in extra checks and balances online. False employees are more easily noticed when more eyes are included in the process.

Visibility goes beyond just the core team and hiring managers. The levels above the hiring manager will raise the question with HR when an unfamiliar name is on their team dashboard through HRMS self-service. HRMS org chart functionality will provide visibility allowing anyone in the organization to catch any errors.

Learn how to manage payroll with HRMS using our comprehensive guide to key HRMS payroll principles

2. Mistakes in employee classification

The question of whether a new position is filled by an employee or independent contractor is a serious one. Prior to implementing an HRMS, it was easy to choose the wrong category. The downstream impacts of a mistake in classification are huge as compensation, benefits and retirement savings will be incorrect. An HRMS payroll module will remove this issue through the classification of a position as an employee or contractor only basis. All process steps and data elements will be assigned through this decision. A properly configured new HRMS will make employee classification problems a thing of the past.

3. Poor data entry

A common payroll error that persistently appears is incorrect data entry. A data entry operator entering details from paper forms can occasionally make a mistake and sloppy handwriting can pass by the data auditor too. The remedy to this problem is to implement a new HRMS that allows employees self-service access to enter and review their own details. The employee knows their own data better than anyone else and has a vested interest to enter it correctly. An HRMS payroll module will reduce errors in this area.

4. Missing changes in date related transactions

Age-related transactions are a payroll error that should be preventable, but require frequent and time-consuming audits. Does your company provide health coverage to dependents over the age of 21 who are in full-time education? Is there automatic functionality to remove the benefit when a dependent reaches the cut-off age? Does your HRMS handle the regular status checks to ensure that the dependent still qualifies for the coverage? These small details can be missed or forgotten. A new HRMS payroll module can handle this administration easily and will eliminate date related errors and excess premium payments.