Which payroll schedule should your business use?

While payroll schedules exactly aren’t the biggest conundrums facing organizations, it can take quite a toll on their bottom line. Payroll schedules take a different shape depending on the size, type and industry of the business. Payroll generation has two substantial costs attached to it, which are monetary and time.

The most commonly used payroll schemes in the US are monthly, semi-monthly, bi-weekly and weekly. But it’s never one size fits all and companies should devise a payroll strategy that best suits their business. Frequently jumping ship from different payroll schemes (especially dumbing down on the frequency of the payroll) can prove to be too cumbersome for both your HR and accounting departments to handle.

Weekly

This is the most popular choice for employees who work on an hourly basis because of their rather inconsistent and more tumultuous work schedules, primarily because they are often hampered with overtimes. Weekly pay schedules make it easy to compensate employees for their hourly wages but there is a disadvantage. Costs accumulate each time the payroll is generated, thus placing enormous burden on the company’s resources.

And if you throw in tickets (complaints or claims) submitted to HR for payroll generation, it will quickly make life both stressful and frustrating for the HR and accounting departments.

Bi-weekly

Another popular option for the trades industry (food, plumbing and trucking) is the bi-weekly schedule. Besides the cost incurred each time the payroll is generated, a big disadvantage is the fact that each month does not have a complete set of four weeks. The overlap with other months means that HR and accounting departments will have a hard time generating the payroll.

While the frequency of generating the payroll has been shaved by half, this doesn’t mean that the job is any less frustrating for your HR department.

 Monthly

It is obvious that a monthly payroll schedule is the least popular option for employees. Because they have to make do with their finances for the rest of the month. From the employer’s perspective however, a monthly payroll schedule is by far the least cost prohibitive option. For starters, it becomes easy on the HR department to monitor employee benefits and their attendance.

Monthly and biweekly are easier for the business

Payroll generation is a complicated task because a myriad of factors have to be taken in to account such as commissions, bonuses, overtime pay, benefits and deductions. Depending on the size of the company and number of employees it can become a very time consuming process.

While frequent payroll schedules may create happier employees at the end of each week, it can have a profoundly negative impact on their bottom line if the employers make use of payroll service providers.

There is less paperwork involved

Although payroll software have now allowed organizations to store payroll data for several years in servers and hard disk drives, companies are still required by the federal government to print and file their payroll registers. The paperwork can quickly occupy a substantial amount of space in the office and storage room, a shift to biweekly and monthly schedules means there is less paperwork and fewer complications.