Bushfires, floods, blackouts, cyclones, and infectious diseases are disasters that have brought Australia and the world to a halt in 2020. These disasters also impact businesses and interrupt work. COVID-19 has put pressure on many small businesses and has caused business owners to be challenged and finding solutions on how their business is to function through a pandemic. Unfortunately, when business owners operate reactively, they have no effective disaster recovery and business continuity plan. This impacts the payroll services significantly, as employees are left without wages, taxes unpaid, and leave entitlements undistinguishable. During any disaster – the payroll function is always a critical service to a business. In fact, COVID-19 has brought to light how payroll business continuity needs to be at the forefront of business planning. Business owner’s need to consider payroll as a business necessity, its importance (whether your business utilizes external partners or has an in-house payroll team), how prepared all stakeholders involved with payroll are, security management, and how to mitigate the effects of any natural disaster or pandemic can have on their business.
How to avoid a disastrous failure
You can’t expect that in one year, so many unexpected situations would hit our borders. Yet here we are, twelve months into a year where we have seen so much heartache and our work-life has become intertwined with our home-life. Having a contingency business payroll plan in place is crucial for your business, and is key to your business surviving years like 2020. The aim of developing a contingency plan is to minimise disruptions to payroll processing. After all, employees still need to be compensated and taxes paid.
A well planned out payroll continuity plan can be the deciding factor whether your employees are paid on time or not at all. A payroll services continuity plan identifies events/disasters that may affect your company and has details on how your people can respond and recover from these pressures.
As a business owner, you may feel that investing time into a payroll continuity plan may not be valuable for your business. However, even a simple and straightforward list of policies and processes to follow is useful for your payroll teams to continue functioning in times of crisis. While all businesses – small, medium, and large enterprises are impacted by business interruptions, smaller businesses may not have the ability to recover from a crisis.
Payroll contingency planning isn’t just for major disasters and pandemics; it also covers you for technology outages, loss of data, changes to legislation, and minor errors that occur in your business-as-usual operations. Payroll continuity plans will have you examine your business and how it adapts to changes in the marketplace, risk management, and disaster recovery. A payroll continuity plan will be specific to your business needs and will ensure that your staff is still receiving their salaries. Your payroll contingency plan will focus on how your people (stakeholders involved to complete payroll tasks), technology, and processes needed to complete payroll tasks.
Below are some areas that need consideration when examining your payroll risk exposure and assessing the payroll function continuity readiness. Having a clear plan and answers to specific questions will help you build a resilient payroll function – ready to attack any crisis that come their way.
- Payroll organisation
Who is responsible for completing your payroll activities, and how are they performed? Are they working on paper or using software (cloud-based or desktop software)?
- Staff capabilities
Are your payroll staff qualified and up-to-date on the latest regulations and technology?
Are there arrangements and specifications in place that cover overtime and limited staff availability?
- Working in-office or offsite
Do your employees need to be working on site or can also function offsite?
Are they equipped with the right tools and hardware (laptop, internet, safe working spaces, remote access to applications, etc.)?
- IT infrastructure
Is your IT infrastructure secure?
What are your infrastructure weaknesses?
Does your payroll value chain have physical processes that cannot be eliminated?
If access is not available, how will the impact be mitigated?
- Access to payroll data
Can your employees access the payroll system remotely and is this secure?
Are your monthly files up-to-date, and are files, pay-slips, pay register, and other payroll files readily available for employees to access?
Outsourcing your payroll services
Payroll is a business necessity. Being sloppy with your payroll function, not adhering to legislation, and not paying your taxes can get you and your business into a lot of trouble. Hefty fines are involved and, in some states, – it is a felony.
Outsourcing your payroll to an experienced vendor is an effective way to protect you and your business against any crisis that may come your way. It will also ensure that your payroll continues to function and is protected against anything that can threaten payroll delivery. Outsourcing to a tax and payroll partner can minimise your software, staff, and training costs. They are experienced and mitigate risk with their dedicated teams of experts. They focus on your payroll, saving you the headache of relying on internal employees that may not have the experience or expertise to focus on payroll. Payroll specialists also have access to industry best practices and save time by leveraging the most effective ways to complete payroll tasks. Your payroll vendor can work together with you and have a deep understanding of your processes and employment conditions – and each of their team members can apply that knowledge to processing your payroll.
In addition, once you decide on outsourcing your payroll services, it allows you to take advantage of your vendor’s payroll continuity plans. Their plans are well-developed and tested. Their staff is also trained to implement contingency plans in the case of a crisis.
Outsourcing your payroll function and contingency plan
Implementing your payroll backup plan can be a complex task if your employees do not have the right awareness and training. Outsourcing your payroll can provide you with assistance and protection against the crisis, an absent payroll employee, or office site technology outages to ensure your employees are receiving their correct wages on time.
It is important to consider: in times of disasters and global pandemics, can you protect your employees and continue to give them the stability they need or would you benefit more from outsourcing the function to a tax accountant who specialises in business payroll.
Nothing you can do will stop natural disasters, pandemics, or IT outages. But acting now, you can prepare your business on how to deal with challenges that arise during this crisis. When thinking about payroll and disasters that can occur, 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.