COVID-19 – it has been the most talked about topic of 2020. It has changed our social eco-system and transformed the way businesses work. It is the year where online working finally becomes the norm. Shifting to an online business model has brought forward issues to businesses’ payroll services.

As a small business owner, you’ve had a big year and faced many unprecedented changes to your payroll. There have been measures introduced by the Australian Government. The Fair Work Commission (FWC), and the Australian Tax Office (ATO) to support businesses negatively impacted by COVID-19.  The relief packages have encouraged the retention of staff and aimed to help relieve the cash-flow strain. While all government help is welcomed with open arms, staying up-to-date on all the changes may have become overwhelming for your business and put your payroll in shambles. And making sure that your payroll system is compliant with the latest legislation can prove to be more challenging than pre-COVID-19 Days.

In a perfect world, and during non-COVID-19 times, employees are paid correctly and on time. However, during a pandemic (and 2020), the payroll function quickly breaks down. And when payroll stops, so many other essential business-essential functions stop too. As a result of changing payroll policies, and the introduction of new measures, payroll systems have quickly spiraled out of control and mistakes are occurring leaving business owners confused and trying to find solutions to their payroll problems.

Large enterprises and small businesses can function with a not-so-good payroll function. However, this doesn’t mean that they are functioning correctly, adhering to payroll requirements. What is working today – may not be correct tomorrow. And when payroll mistakes are made, they need to be quickly rectified to avoid hefty Australian Tax Office fines. When the payroll function runs well – it’s almost invisible to businesses, which brings me to my next point… An efficient payroll system.

In 2020, the importance of having an efficient payroll process and a payroll system that allows employees to access remotely is second to none. Payroll in New South Wales has many variants and exemptions. Thresholds are constantly changing, and with the introduction of Jobkeeper, payroll continues to become more complicated. Businesses relying on manual processes may encounter payroll errors and may fail audits from the Australian Taxation Office. In the last month, COVID-19 drove a 400% increase in new regulations impacting payroll globally. That is a lot of new payroll regulations to remember when manually completing your business’s payroll. Here in Australia, there has been misunderstanding around the JobKeeper Payments, Jobmaker eligibility tests, as well as staying on top of workplace entitlements.

When businesses think about payroll, they may be associating payroll with paying employee wages and overlooking the importance of what payroll data can provide for them. According to Deloitte “organisations need open, accurate payroll data to run and analyse current operating models, run scenarios and also know exactly what is going on, to look at how you allocate work, where, at what cost and with how many resources.” Connecting payroll with Human Resources and Finance can directly benefit your business by reducing system complexity and increasing efficiency. Your workplace management costs, including non-compliance fines, payment disbursement, and distribution expenses can also be reduced. In addition, when your payroll is digitalised, your business has productivity advantages and can quickly adapt to changes in the workplace. For example, in the light of COVID-19, a digitalised business can quickly adjust its payroll models and rely on an agile business climatising to changes.

Another aspect often overlooked by businesses when it comes to payroll transformation is the ability to have a real-time view of payroll data. With this kind of payroll view, anyone in your business – from HR to Finance to Sales can gain insights into the business unlocking the ability to make smarter business decisions and business projections.

Payroll planning

Has COVID-19 highlighted the importance of having an up-to-date payroll business continuity plan to aid business activities to continue through a crisis, or support the resumption of business activities once the crisis has lessened? Having an effective business continuity plan can ensure you have minimal impact on continual operations. It also means that you can determine how your business can continue to operate after (and during) a crisis. As a part of a business continuity plan, don’t forget to focus on your business payroll function and processes. Clearly mapping out your payroll processes make changes easier to deploy in times like COVID-19.

When thinking about payroll business continuity, there are seven areas to consider payroll risk and exposure.

  1. Technical infrastructure

It’s time for efficient payroll software that sits in the cloud. Working with the software provider and your payroll team (or external payroll team of tax accountants) be sure to determine if the software is secure, how the systems can be accessed, how easily the software can be customised to fit your business (and how much this will additionally cost), and what kind of costing framework is in place. Is it a subscription or upfront cost?

  1. Responsibilities

Whether you are performing your own payroll activities or you are working with payroll tax accountant specialists, it is important to understand who is responsible for performing payroll activities. Who will update the system with new legislation? Who will check current exemptions are up-to-date? These are just a few question’s that should be raised when mapping out payroll roles and responsibilities.

  1. Office arrangements

During COVID-19, working from home has increasingly become a norm. To ensure that your business is not caught out in a lockdown, ensure that all the key payroll personnel have anywhere access to the payroll system and are equipped to work from home. In addition, ensure to have guidelines around data confidentiality when working away from the office.

  1. Personnel availability

Try to have an understanding of your payroll staff and anticipate how a lack of availability can impact your business. Also, map out how overtime is calculated and works for your business.

  1. Payroll paper processes

No matter how much we try to move to a paperless society, there are physical processes that still exist in the payroll value chain. When you have an understanding of these processes – you can mitigate the effect if there is limited or no physical access to the paper trail.

  1. Bank payment

How are your bank payments released, who is in charge of execution, and what is the process are payment procedures? If there is only one person in charge of this process, it may be beneficial to educate a second stand-in person, in the event that one becomes ill or leaves the business at short notice.

  1. Payroll data

Payroll data is so important to every business. If payroll fails, the business can collapse. Ensure that secure remote access can be guaranteed for key personnel to have access to payment files, pay register, and general ledger files.

Lessons have been learned during COVID-19. There are so many things that need to be considered to continue working at full capacity. Your payroll function is a necessity for your business. It’s not a cost center, but the source of how your business functions. Having up-to-date payroll software will not only benefit your time but also your business. Our Eastern Suburbs Payroll Services work effortlessly to understand and simplify payroll changes and adapt them to each individual business. We can help you focus on your business while you leave the boring payroll stuff to us. Our payroll service consultants can discuss the payroll digital transformation and how your business can benefit from its implementation efficiency. Our aim is to streamline your payroll function and give you the confidence that you’re adhering to all policies and thresholds.