Why Payroll System must Collaborate with Human Resource System and Finance

The payroll system and human resource system are two main pillars in any organization’s management. They must be maintained appropriately along with finance to execute a company’s accounts and HR smoothly together. Finance ad human resource systems have several common functions and they need to collaborate closely to avoid conflicts. Same is the case between HR and payroll system which share similar grounds to handle employee data, salary classification and leave management. The gap between two sections should also be minimized for better organization of the departments to reduce costs and efficiency of resources. Instead of the obvious needs of integration between the sections, many companies cannot succeed to bring the two parts closer due to differences in cultures and thinking. There could be more issue that should be addressed to achieve collaboration of all the management sections of the company.

Distinction between professionals

The basic clash arises in separate departments due to the difference in the breeding of people working in them. Finance people are purely “number people” who can work on predefined rules and resolute limitations of accountings. They follow local and international legal regulations and organizational working policies. Whereas a human resource system holds individuals with “people people” vision, whose work is to make strategies and policies to hire resources, retain proficiency in the company and empower employees to polish their skills further. But payroll system people are destined to work on both employee related issues and accounts to estimate salaries and reimbursements. For that reason all three parts should be connected strongly to improve efficiency and lessen the overhead.

Acknowledging each other’s role

Another problem that holds people of three departments to work together is the lack of appreciation of each other’s role in the organization. Carrying out complex processes of management can be simplified with proper interaction and communication between the sections of HR, finance and payroll. The level of accuracy can be increased and average of errors can be eliminated with help of integrated efforts by professionals of related departments.

Mutual coordination

All the sides in the company management should perform their duties along with mutual coordination with other counterparts. Hard work of one section can be ruined with negligence of another department that can also negate the spirit of collaboration between them. Working in two opposite directions can create multifaceted problems that will make the management difficult for all sections.

Better integration

All the aspects of labor and payments relate directly to the payroll system, but it also includes the policies of HR and financial matter to maintain the accounts. It shows the need of closely coupled integration between the parts of the management. All systems should be technically connected to keep the data centralized and systematic. In the same way the work force of the departments should be in constant connection to handle the system proficiently. They can run the whole setup strategically for business process improvement as well as better work environmnt. 

Important Consideration for Payroll System Implementation

While selecting the in-house or outsource payroll system, business management should consider a few key points that are eminent to establish dependable payroll and human resource system departments. Keeping in mind the specific considerations of your business matters, pick the payroll that can fulfill your expectations to the maximum as well as provide credibility through various features. It will not just impact your daily routine payroll process, but also contributes to the success level of your company. At the time of implementation, you need to analyze following factors.  factors. 

Time of conversion

Thinking of the conversion to latest payroll system needs proper planning and timing to be implemented. Certain kinds of organizations find a particular time of year, more easy to convert their manual payroll system to an automated system. Most of the enterprises find it easy to transfer to new human resource systems and payroll process at the end of the year to make a new beginning for the new year with fresh management. For a quick change, you can also implement the system at the start of the new quarter, but it will still need a conversion of internal details once again at the start of the calendar year.

Resources required

The amount of data to be transferred from one payroll system to another would be sizeable that needs considerable resources and manpower. Plan and arrange the resources before you start implementing the new system. The same criteria will apply while converting to a new human resource system in any organization. Dedicate yourself, staff members or hire new resources for accurate and reliable data entry to avoid any discrepancies. 

Transferring data

Another important factor that can settle or damage your management system is data transfer step. Make sure that transition of data from one payroll system to another is done precisely without any gap or inconsistency. Find out the way of transferring data whether you need to enter all the data manually or it can be transferred automatically to the other side through easy-customizable link? After convenient and smooth transition of data, run reports on both system to ensure the accuracy of data.

Running systems side by side

For large organizations, it’s recommended to run old and new systems side by side from one to three months to check the accuracy of data and operations done through the system. The discrepancies can be identified and eliminated by running operations and reports to cross reference the payroll system history, earnings, deductions, tax calculations, etc. A slight difference can affect the whole management of payroll and human resource system process. 

Integration capability

Before taking the service of any management system vendor, make it clear that how much the payroll is capable of integrating with human resource system or accounting system in the organization. It would be highly beneficial if payroll, HR and ledger system is well integrated. The advantages would be threesome by eliminating duplicate entries from diverse systems in the management section to reduce errors, lessening the paper work and an extra load of managing the manual files plus appropriately integrated reporting.