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Published November 10th, 2016 by

Importance of Integrating Time, Attendance and Payroll Services

Importance of Integrating Time, Attendance and Payroll Services

In running a business, there is a need for a seamless integration among associated tasks to make sure that work processes are properly carried out, and the target output is reached with greater accuracy and efficiency. However, due to the differences in the management teams that handle different departments – alongside the system and software they use – there are some gaps in-between that is difficult to manage. It requires strong communication skills to mitigate these lapses, but if only the processes can be automated and streamlined, businesses would not even hesitate to consider taking the option.

This article is all about mitigating the challenges arising from the lack of integration and seamless interface among HR, time and attendance, and payroll services. Especially when these are outsourced, it is important that there will be a strategic management solution to implement in order to stay efficient while doing separate tasks.

Alongside, here we will also discuss about the reasons why businesses of today must do time tracking. Know that it isn’t solely for the monitoring’s sake only, but it opens a door for better insight about employee productivity and profitability. When time keeping and attendance is accurately done, it can positively influence payroll – both in its processes and guideline implementation.

Also, we will discuss here the advantages and disadvantages of outsourcing payroll services, as well as the different benefits of having it outsourced to a payroll service provider that can effectively integrate with the software and the system for your time and attendance tracking.

Why Time Track?

Time keeping and attendance has a direct relationship with salaries or wages, therefore it is only logical to integrate their systems to make sure that there is accuracy of output and efficiency with the whole process.

Through the use of software, technology has its way of eliminating the cumbersome task of manually doing time tracking. Employees need not be troubled in dealing with inaccuracies as some of the time tracking tools can automatically track and record their time. Tracking hours, on a personal application, can encourage better productivity. For businesses, tracking time not only promotes productivity but also to have an accurate depiction of what their employees do with the time they spend in their offices. This way, incentives and attendance memos are effectively implemented, and that businesses can strategize better about the ways on how to properly allocate its resources, particularly in employee salaries and benefits.

Keeping track of employees’ time are the windows to understand the productivity and profitability of your labor workforce. There are businesses that are more particular with time management and time tracking like manpower outsourcing agencies, consulting firms, legal services, project management companies, manufacturing plants, and even freelancers. Time for these businesses, is a precious commodity, and time tracking is a way for them to accurately measure their success and ability to make more profits.

Why Outsource Payroll?

In general, outsourcing is a growing industry, wherein, according to the key survey finding from Deliotte’s 2016 Global Outsourcing Survey, where about one-third of the respondents said that their businesses are measuring their innovation value according to the outsourcing relationships they build. It emphasizes that businesses see third-party service providers as forefronts of bringing technology and advancements for the growth of their businesses.

The recently released, ISO37500:2014, aims at providing guidance for outsourcing for any organization and sector that wishes to embrace it. This just shows how the world perceives of its growth, and its importance in the success of any kind of business.

Payroll is an important arm of the centralized HR function. Along with time and attendance, payroll should be given the right attention to make sure that your employees receive the rightful compensation and benefits for their services, as well as to keep up with tax and other compliance standards that the government imposes over the labor sector.

The payroll system is tedious work itself. Without expertise or substantial experience, one can easily get lost in managing it correctly, given the complexities of constantly updating IRS regulations, and the now more diverse workforce and their schedules that vary as well. Penalties tend to be harsh for payroll compliance violators, even if you did not intentionally make the mistakes. Errors in payroll may cost your business a big deal of money, even its own reputation.

Now that businesses’ hands are already full in executing the core tasks of innovating, marketing and selling their products and services, many resort to outsourcing. This gives them more freedom to concentrate on their profit-yielding activities without sacrificing their non-core, but equally important tasks of ensuring the smooth flow of their internal operations.

Outsourcing, particularly payroll, receives mixed reactions from both employees and business owners themselves. The idea isn’t fully embraced yet, mainly because of a third-party involvement, which poses some risks like the exposure of crucial employee information and less control for payroll and financial access. Others, however, saw that its convenience, compliance and cost savings outweigh the risks. For a more accurate judgement and decision-making towards answering the question as to whether to outsource or not, here are its advantages and disadvantages to consider, and what do payroll services provide, in the perspective of different elements surrounding its process:

  1. Financial

Cost savings as a benefit is a subjective matter, because it largely depends on the size and location of your payroll. For large scale enterprises, or those that deploy to global sites, outsourcing is a more viable option since it considers language and time zone differences and varying tax legislations in different countries. Having an umbrella payroll processing provider that handles multiple payroll sites can be more cost effective to deal with, since you do not need to worry about system integration or interfacing, coordination and communication and pay for separate entities to deal with across the globe.

For small businesses, the volume of payroll recipients may not justify an in-house payroll to commence, considering the capital needed for manpower, tools and training. An outsource solution, which is now more sophisticated because of cloud-computing, can be scaled according to the number of employees to process. Pricing schemes for payroll services were more flexible now, offering flat fees or customizable features that can maximize your benefits. Cost savings arise from the fact that you can lower the fees by not getting the full-featured package that payroll companies usually offer, and choose only the ones you will need at the moment.

The downside, however, is the risk of inaccuracies due to the diversity of scope when it comes to large scale enterprises. For small businesses, or in general, the hidden costs may be lurking around somewhere in the contract that weren’t discussed by the payroll agency, that is why it is important to be watchful about the service providers they choose to deal with.

  1. Operational

In most cases, businesses outsource tasks that do not have a direct effect on the workflow concerning product innovation, marketing and delivery. However, there is a direct effect for employees who may find that outsourcing is a sign of a threat to their confidential information. Outsourcing risks exposure of associated company data, where in the case of payroll, involves personal employee information such as name, residence, copies of IDs, account info and salary info. Not having an internal person to deal with concerns about payroll is another matter, which may also affect employees somehow.

  1. Compliance

There isn’t much to contest when it comes to the benefit of compliance. Most payroll companies have the substantial experience and the expertise in handling and processing compliance-related requirements when it comes to tax and labor laws.

Another aspect of compliance, however, may be a disadvantage for a business, which is about quality. When outsourcing, the third-party payroll processing firm may not have the sensitivity to deal with the employees’ issues that will be brought to them. This taints the supposedly good working relationship between the business and its employees. Without a direct interaction, businesses may not know fully the concerns of their employees when it comes to payroll, but will only rely on the reports of the service provider, which may not be that comprehensive and unbiased at all.

Why Integrate?

Payroll basically relies on employee time and attendance. This simple relationship, however, comprises of complex processes and tedious work involving administrative, financial and legal aspects. In the past, these were the most error-prone processes, but thanks to the digital technology, it can now reap the benefits of automation and electronic processes instead of settling with time-consuming manual methods. When it comes to time tracking, the punch cards – which are easily manipulated (time fraud), are now replaced with more sophisticated time tracking tools that are more accurate and tamper-proof.

The key to a seamless workflow is integration. Since these processes are related to each other, it is only logical to interface the systems to ensure a smooth flow of work and data, which also minimizes errors. It is now easier to integrate because of technology. Businesses deal with compatibility issues when it comes to software that each uses.

So why is workflow important anyway? As you see, time is in the center between attendance and payroll. It makes sense that accurate and efficient tracking time produces the same positive results from the two processes. Integrating modern time tracking within the core of these two processes can give much more insight about labor costs and ROI. For attendance systems, it gives a deep dive on understanding employee productivity. Integration seals the deal in centralizing a more efficient management among these interrelated processes.

Using a software, or outsourcing the three processes if you lack the resources to get one, can help the integration be made possible. Having an HR software solution that can effectively integrate the processes can empower your non-core tasks, and simplifies everything. Time tracking in payroll and attendance management reduces the risk of time fraud. But the key for maximizing the benefits of integration is dealing with the right software or service provider.

Payroll, as one of the crucial elements to deal when it comes to employee management, impacts the integration in so many ways. Whether you outsource or have it processed in-house will have a direct effect on HR management. Should you choose to outsource, it is a must to look for the most reliable and the best payroll processing firm to partner with to make sure that you won’t have any problems with integrations.

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