A lot has changed in the arena of payroll processing over the last two decades. In this short amount of time the U.S. has seen a revolution of sorts, one that has led to more companies than ever before outsourcing payroll to companies like ours. With outsourcing, the emergence of cloud-based payroll has come. Yet in the midst of all this change, there are still companies using paper time slips and other manual methods.
There is nothing wrong with doing payroll manually if that's what you prefer. But you should know that manual payroll is risky business in an era of intense regulation. For example, paper time slips alone can lead to all sorts of problems if the HR department isn't careful.
Below you will find five reasons to send those paper time slips packing. It is far better to transition to a digital time clock. It is even better to take the entire payroll processing system into the digital arena by investing in high-quality software or contracting with a cloud-based service provider.
1. Higher Risk for Human Error
The first reason on our list is the reality that paper time slips are subject human error. Let's face it; it's easy to miscalculate the amount of time worked at the end of the week. That person in the payroll department tasked with adding up all those hours may be rushed to get the job done so that numbers can be sent to accounting first thing Monday morning. A rushed job is one ripe for error.
Employees can also mistakenly enter incorrect times. Perhaps they do not read the clock correctly. Maybe they do not understand basic concepts like clocking out and back in for lunch. Innocent mistakes happen all the time.
2. Higher Risk for Fraud
Unfortunately, there are those workers willing to take advantage of the limits of paper time slips to commit payroll fraud. They record hours they have not worked. They claim to have worked overtime when they really haven't. Taking advantage of paper time slips is limited only by the fraudster's imagination.
3. Data Entry Mistakes
Paper time slips may facilitate the need for data entry if you are using them in concert with a basic software package. Every time data is taken from a slip and entered into the computer, the risk of an error is present. Indeed, data entry errors are among the most common payroll errors we know of. By contrast, an automated time and attendance solution combining daily clocking with tracking eliminates the need for manual data entry.
4. Potential Compliance Issues
Next on the list are the potential compliance issues related to paper time slips. Remember, you are obligated to pay your nonexempt employees time-and-half for all hours in excess of 40 worked during a single workweek. You are also required to keep accurate time attendance records. The danger of paper time slips in this regard is that inaccurate data could lead to compliance violations. Such violations are possible even through ignorance.
5. Manual Calculations Take Time
Finally, using paper time slips also means taking the time to calculate hours worked at the end of the week. Someone in the payroll department has to spend time gathering, calculating, and reporting time and attendance data. The time spent doing so is time that could be invested in other things.
If you are still using paper time slips, we would encourage you to consider the alternatives. Transitioning your payroll to a modern, cloud-based system is a better way to go on many levels. Contact us if you have any questions.