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More Australian businesses are falling short in ensuring their payroll systems are up to par.
Australian businesses are being encouraged to ensure their payroll professionals are regularly trained and systems are audited after research indicated a lack of initiative over the last 12 months.
New research by the Australian Payroll Association (APA) highlighted a disconnect between large and small businesses when it comes to the payroll function.
An extensive survey of 2,178 payroll professionals conducted by APA found smaller companies (under 50 employees) were more likely to see a lack of payroll auditing in comparison to large companies (over 500 employees).
The same trend was observed when looking into payroll training being carried out at small and large companies.
“Many small businesses prioritise funding for their core business activities but often overlook the importance of properly maintaining internal cost centres such as payroll,” said Ross Heron, chief operating officer at APA.
“This can lead to a dangerous ‘set and forget’ mentality, where payroll operations are left to run on autopilot without regular check-ins or audits.”
Neglecting payroll will put small businesses in dangerous territory, Mr Heron said.
“Similar to a car, every business function requires regular maintenance and service. In the case of payroll, this means conducting periodic audits and ensuring that those responsible for processing and managing payroll are adequately trained and supported.
“Neglecting this critical aspect of business operations can lead to serious consequences, including compliance issues, financial errors, and decreased employee morale. As such, it is essential for small businesses to prioritise the proper maintenance and support of their payroll operations in order to ensure the continued success of their business,” he said.
The survey asked respondents when their company last undertook a payroll process and compliance audit.
While the vast majority (45.49 per cent) stated within the past 12 months, almost 20 per cent said they had never conducted a payroll process and compliance audit.
A further 23.3 per cent of respondents don’t feel confident they have the knowledge required to ensure their payroll is fully compliant with payroll legislation, and 35.3 per feel as though their employer does not provide the necessary support, training and resources to ensure a fully compliant payroll operation.
An average of 1.6 days of payroll training or professional development was recorded for companies surveyed in the last 12 months.
Almost half of the respondents are not currently a member of a payroll support organisation, further opening themselves up to the risk of neglecting their payroll responsibilities.
“Industry instruments and the pay conditions outlined within them can be complex and difficult to navigate, regardless of the size of the business. These instruments do not differentiate between a business with 15 employees and one with 1,500 employees; the same conditions apply to all. In theory, larger businesses have greater resources available to ensure that payroll is processed and managed in a compliant manner,” Mr Heron said.
“For this reason, many small businesses choose to outsource their payroll operations. However, it is important to note that an employer cannot outsource their liability. Regardless of whether payroll operations are outsourced or handled in-house, it is essential for all businesses, including small ones, to operate with a framework that includes payroll risk and governance.
“By implementing a robust business risk and governance framework that encompasses payroll, small businesses can effectively manage their obligations and mitigate the risk of non-compliance. This includes ensuring that those responsible for payroll processing and management are properly trained and supported, conducting regular payroll audits to identify and address potential issues, and seeking expert advice when necessary.”
Seeking guidance from payroll specialists such as the Australian Payroll Association will help companies ensure their payroll function is compliant.
“In our experience, we have found errors in every payroll audit that we have completed, with overpayments being more common than underpayments. Once a compliant baseline has been established, it is essential for businesses to ensure that their payroll operator is adequately supported on an ongoing basis,” Mr Heron said.
“By ensuring that your payroll function is both compliant and properly supported, businesses can mitigate the risk of financial and reputational damage resulting from payroll errors. Seeking the guidance of payroll specialists and providing ongoing support to payroll operators can go a long way in achieving payroll compliance and ensuring the ongoing success of your business.”
To learn more about the research conducted by the Australian Payroll Association, access the full report here: https://austpayroll.ac-page.com/2023-payroll-survey-download.
To contact the Australian Payroll Association or book its services, you can visit its website at www.austpayroll.com.au or call them at 1300 729 455.
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Training is the process of enhancing a worker's knowledge and abilities to do a certain profession. It aims to enhance trainees' work behaviour and performance on the job.
