It happens… whether you have had big financial pressure on your business, staff members have been off with illness, or various other reasons. Unfortunately, sometimes the payroll gets missed and you end up with some slightly disgruntled employees.
Paying staff on time is obviously very important in order to keep morale high and they could quickly start to lose motivation otherwise. If this becomes a regular occurrence employees may well start looking elsewhere for other jobs, which could cause catastrophic consequences to your business.
Then there is the legal side. In employee contracts you have to put in writing the date on which you will pay them. Failure to pay them on time can mean that you have breached their contract, so they could sue your business.
Why Businesses Miss Payroll
Luckily missing payroll isn’t a regular occurrence for many businesses, and only tends to happen when there are either insufficient funds, or mistakes in the payroll process.
The pandemic has had a huge impact on cash flow in businesses, with many having to furlough staff in order to keep afloat. With all the grants, business interruption loans and VAT deferments coming to an end the next few months are as critical as ever. Not only have businesses got to start paying back these loans, but it is hard to gauge how much returning customers will be spending due to economic uncertainty.
Mistakes in the payroll process
One of the reasons companies often make payroll process mistakes is because companies tend to underestimate what is involved with running a payroll function efficiently. It is easy to cut corners and rely on untrained or unsuitable qualified staff to carry out payroll. Not only can this lead to expensive mistakes, but also non-compliance within the business. Payroll legislations are regularly changing, so maintaining this high level of knowledge is key to process payroll correctly.
Avoiding Missing Payroll
In order to maintain a healthy cash flow it is important to issue and collect invoices promptly, and have a financial forecast in place too. A forecast will enable you to update data regularly and plan scenarios too, giving you an idea of how much things will impact your cash flow. The earlier you spot any potential issues with your cash flow, the longer you will have to rectify them.
If you are still struggling with cash, then you may want to look into short-term loans or speak to your bank about restructuring any debt. It is important to make sure you have the ability to pay back these loans otherwise you may land yourself in more financial trouble. Another thing to consider is late payments from your clients. If these occur regularly, you may want to look at invoice financing. This is where you are lent a percentage of your unpaid invoices immediately.
Use Payroll Software
The best way to avoid errors with your payroll is to use Payroll software like Sage. Not only does this ensure timely and accurate completion of your accounts, but it also significantly reduces the risk of human error. Sage 50cloud Payroll is an easy way to manage your payroll securely, accurately and ensure compliance too. Featuring an array of powerful tools, you can get a clearer insight into your company finances – allowing you to make better decisions.
For further information about how the Sage 50cloud Payroll can help keep your business running at its best, get in touch with the team at Reality Solutions today on 01482 828000. We also provide Sage support & training if you need additional help with integrating Sage into your business.
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