Labor costs are the most significant expense for company leaders, with employee wages, benefits, payroll, and other related taxes accounting for up to 70% of total business costs. If not monitored closely, these costs become overwhelming when unnecessary expenses start creeping in.
If you work in accounting or finance, you understand that it’s crucial to eliminate any unnecessary payroll costs to help better track employee behavior and improve the company’s bottom line. Follow three tips to minimize unnecessary payroll costs immediately:
Monitor employee schedules
If you want to tighten up payroll expenses quickly, you’ll need to pay employees according to time worked, not time scheduled. If employees arrive late, leave early, take extended lunches, or attend personal appointments, you should not be paying them for that time. Employees are encouraged to take extended lunches and regular breaks, just ensuring they avoid tracking time when they aren’t actively working.
Although overtime is unavoidable sometimes, don’t encourage it unless necessary. Sometimes overtime is paid out automatically because the employee forgot to clock out or is in the habit of working more than 40 hours per week. If you use time tracking software, set up automatic alerts when overtime is approaching so, the employee can clock out.
Understand expense reimbursements
More than 50% of company travelers fail to follow their company’s policy when booking flights, hotels, and other accommodations, according to recent data. Be sure to set strict policies on what airlines your employees can book with and eliminate unnecessary food and entertainment expenses.
Review the receipts and expense reports carefully to ensure nothing slipped through the cracks. Once everything looks good, send the reimbursed expenses directly through payroll.
Invest in payroll software
The best way to get rid of an unorganized and cluttered payroll is to invest in payroll software. This type of software helps you eliminate paper and rely on automation, leaving little room for human error.
At Payroll Office of America, we offer software that creates the perfect paycheck every time through real-time calculation, employee self-service, and tax table updates. Not only will you worry less about payroll, but your employees will have more agency and feel empowered because they can preview pay statements, control direct deposits, and change W4 history.
Visit our website to submit your company’s information and receive a free quote today. We look forward to hearing from you and helping you simplify your payroll processes!
