What are the first things that come to mind when you think of payroll? Is it paychecks or taxes, maybe even direct deposits? What about your 401(k) contribution? Many of these things come to mind when I think of payroll, but one is at the forefront. It's paper. For most companies, payroll is one of the most paper-intensive processes.
Think about it, each step in the payroll process has some type of paper involved. Payroll software has come a long way since software as a service (SaaS) first hit the payroll industry. You now can completely eliminate paper in the payroll process. You can start recording, transmitting, and communicating all the necessary pay information digitally with the ultimate goal of processing a paperless payroll. It's estimated that 3% of a company's revenue is spent on paper, printing, filing, and the cost to store and maintain files of information.
Here are 5 simple steps your company can take to start processing a paperless payroll:
1. Get all your employees to utilize Employee Self Service
The first and most crucial step to becoming a company that processes a paperless payroll is to make sure your employees use an employee self-service (ESS). With ESS, there is no longer a need for you to spend precious time and money printing off paychecks or paystubs. ESS can also eliminate all the paper used in requesting any type of PTO (Paid Time Off). You don't need managers to sign paper requests; they approve submissions online. You can get rid of the stack of paper requests building up while keeping track of all those paper requests during each pay period. During one of the most hectic times of the year (i.e., year-end), you don't have to worry about W-2s for all your employees.
ESS can be your company hub for communicating all pay and PTO information directly to your employees. This feature can keep you and your employees organized. No more lost paychecks to be reprinted. No more having to print (or reprint!) multiple paystubs upon request when your employees are looking to get financing. No more reprinting lost W-2s in April so your employees can file their taxes. Your employees will access all their pay information anytime they want from any device they choose.
2. Get all your employees on Direct Deposits or Pay Cards
To get the ball rolling towards a paperless payroll, ensure all your employees receive their pay via direct deposit or pay cards. With 93% of employees receiving direct deposit payments, this is the top way companies pay their employees. Furthermore, in 2018, check fraud accounted for 47% or 1.3 billion of industry deposit account fraud losses. In the U.S, around 10% of employees are underbanked. Pay cards are a viable option to pay unbanked or underbanked employees and act as a pre-paid option for employers to pay employees in a convenient, paperless manner. As your employees utilize other personal finance technologies like mobile banking and online bill pay, it is only natural for them to want to be paid this way. Once you implement ESS as the tool to communicate your employee's pay information, it will be easier to move them to use direct deposit or a pay card.
The great value of direct deposits and pay cards is that they are a faster and simpler way for your company to facilitate payments. You can now reduce the time it takes to process payroll by eliminating time spent printing, stuffing, organizing, and reprinting lots of paper. Also, an added perk is that you get instantaneous check reconciliation. Your employees don't have to wait until the end of the payday to get their paycheck and spend time going to the bank to deposit it.
3. Get all your reports emailed to the necessary people
Since you are processing your payroll with software, you no longer need to print off reports. You should be utilizing the feature in your software that automatically emails all the different and necessary payroll reports to specific people in your company. Your executives and managers can also login into the software at any time to pull standard reports or create custom ones with current data rather than having to wait. You no longer have to print off and distribute a bunch of information after each payroll. This also removes the need of having to store all the reports in a bunch of filing cabinets.
Moving to a paperless payroll will allow you to be able to make decisions from data in real-time. No longer will your CFO have to wait until the end of the month for historical reports. Instead, they will see how the company is trending concerning all the different payroll expenses. Your Operations Manager will be able to monitor how the company is trending with overtime hours. Your HR Manager will be able to see how PTO is trending for the year. Moving away from historical reporting towards forecasting as the basis of your decision-making is a significant aspect of going paperless in your payroll process.
4. Get all your hours imported
Paperless payroll will have all your employees' hours imported into the payroll. Ditch those paper timecards and start having your employees punch in and out on an electronic time clock or a computer. You can even go more high-tech by having your workforce clock in and out by getting their face or fingerprint scanner. This will allow you to import your hours directly into your payroll software rather than spending tons of time totaling up all those paper timecards and then manually keying them in.
Not only does this save you time, but you reduce the chance of error. The American Payroll Association estimates that somewhere between a 1% and 8% chance of human error in computing paper timecards. This is a lot of money that can be saved by making a transition to paperless time collection.
5. Get all your files exported
The final step to a paperless payroll is tying up all of those loose strings of file transfers (payroll journal entries, 401k deductions, payroll taxes, etc.) between your payroll software and your other vendors. You can start by exporting all your payroll journal entries into your accounting software so that you can post them to your general ledger in an instant. Not only can your payroll journal entries be automatically taken care of, but all of your 401(k) deductions can be automatically uploaded to your specific provider also. The perks of using payroll software are that FUTA and SUTA taxes will be automatically deducted and paid on your behalf. This means not having to fill out paperwork and then mailing it in.
When you utilize the export feature in your payroll software, you can cut out most of your double-entry, which means you don't have to maintain multiple databases. You can stop printing reports to key in the information and upload them to your other vendors. The IRS issue 40 million tax penalties to businesses each year. According to the IRS, the failure-to-file penalty is usually 5% of the tax owed for each month or part of a month that your return is late, up to a maximum of 25%. The exportability of the software can save you from becoming one of the 40 million, in turn, saving you money. This export feature will help you process a paperless payroll while making the whole process easier while saving time.
Greater Efficiency = Greater ROI
The goal of your payroll and HR departments is to continue to be as efficient as possible while providing the best benefits for your employees to help them be as productive as possible. This is difficult to achieve, but starting to implement these steps will help to be more efficient. Remember to educate the entire company about how going paperless is beneficial for both employers and employees. Let them know that you are moving in this direction as an investment in them and not just a cost-cutting tactic by the company.
You can do this in stages. Map out an implementation plan that lays out what each phase looks like and a timeline for when. While you are moving through your implementation phases, make sure that paper options are available for a set amount of time so that your employees can adjust. Also, make sure you check in regularly with both the early adopters and those pushing back on the change. Going paperless will definitely help you become more efficient, but even more critical, your payroll process will have a more significant ROI.
If going paperless is a viable option for your business, schedule a demo with us! We offer a wide variety of options for companies based on their needs. With Dominion, you'll be able to reduce the time spent on payroll processes and increase your company's efficiencies.