Achieving payroll continuity during COVID-19

With the COVID-19 pandemic and a global economy that’s rapidly changing, many disruptions have emerged that have serious impacts on payroll processing. For many global companies, inadequate staffing and planning has put them at risk of complications, including missed or late payrolls, delayed third-party payments, potential violations to federal, state or local regulations, and contractual breaches with unions. 

Given the risks at stake, it’s essential for payroll teams to have a contingency plan in place. Here’s some practical advice to help your payroll function maintain the status quo and ensure there are no complications with paying your people around the world compliantly. 

Document key processes

Due to the immense uncertainty of our current climate, you’ll need to ensure nothing is dependent on your own availability. Make sure you plan for who will take over your day-to-day responsibilities if you become unable to work and provide them with proper information.

Are your key payroll processes documented? If not, take the time to document what you know and make sure the documentation is accessible to others in your team.

Here are a few examples of what to include:

  • How data arrives internally into the payroll department and what’s done with it
  • How pay data is completed
  • How data is entered into payroll systems or how it is shared with external vendors
  • How payroll results are reviewed and prepared for approval, including how corrections are managed
  • How bank and GL processes are managed
  • How payslips are distributed

Once documentation is complete, test how thorough and easy to understand those procedures are with someone who isn’t close to the process.  

Build functional redundancy throughout the team

Payroll team members will need to identify processes that are most critical to paying employees and fulfilling tax and compliance obligations. By performing a workflow analysis they can better identify and plan for potential staffing needs. Here are some key questions to address during analysis: 

  • What are the processes?
  • Who performs the relevant steps in those processes? Have they provided documentation?
  • Do you have access to all the relevant systems? Will you need to set up additional user access?
  • Are there any functional gaps? 
  • Are any tasks or processes at risk?

In the meantime, identify a contingency payroll team. Typically, HR and finance teams are familiar with how your payroll function works. Should the need arise, figure out who can be diverted from their regular activities to ensure your workforce gets paid on time.

You may also find that suppliers can provide higher levels of service, which removes risk from your own payroll support capability. It’s worth having conversations with your current provider to fill any potential gaps in workflow.

Ensure compliance is still a priority

While the world is changing, tax filings must be performed on a timely basis. Registrations or terminations of employees with social security agencies will still be needed. Ensure these relevant compliance requirements are factored into your plans and that arrangements are made with relevant tax or social bodies in advance. 

Some government agencies may offer increased flexibility by extending deadlines. But most are dealing with new tax or social security legislation, so negotiations for extensions will likely be more difficult. 

Make sure you monitor changes to local legislation. You can sign up for notifications from government agencies or routinely check their public websites for updates. (We will be sharing legislative updates by country in our COVID-19 Resource Center as well. Stay tuned.)

Make adjustments to key processes

As legislation changes, your team will likely have to quickly adapt their approach to certain processes. To support your team, think about what (if any) workarounds are available to them and whether or not an external vendor can help. 

Here are a few processes that may need adjusting:

  • Printing, signing and filing physical documents
  • Approving payrolls 
  • Managing bank and general ledger processes 
  • Sending hard copy payslips

Touch base with suppliers 

Reach out to key suppliers involved in your payroll service delivery, such as banking, to understand potential impacts. 

If you have many suppliers, try conducting a survey to gather quantifiable information quickly. If you only have a few suppliers, you’ll get more information by talking with them directly and asking open questions, especially around “what if” scenarios. Are they experiencing challenges with business continuity planning? 

Ask them about their own suppliers as well. If you have a payroll provider in a country who is dependent on three other providers (e.g., software, banking and payslip production) then you’ll need to understand where any risks might be present. 

The COVID-19 pandemic is proving to be the most challenging payroll continuity test companies have ever faced. How you approach planning now is vital, not only for the short term to ensure your workforce is paid accurately and on time, but for the long term to build operational agility for a world that demands it.

Our in-country payroll experts are here and ready to support your business’ changing needs. Contact us today to get in touch.

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