Oil and Gas Magazine - Chemical Engineering Masters Ultimate Guide - GineersNow

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N E W SS T O R I E SFour Common PayrollPitfalls in EngineeringBusinessPayroll management in the engineeringbusiness world sounds simple intheory. However, it’s surprisinglyeasy for a growing engineeringbusiness to make payroll-related mistakes,especially if it doesn’t have robust processesand systems in place. In some cases, anerror can have serious consequences for abusiness, ranging from damaging employeemorale to losses from fraud.Here are a few of the most common errorsindustrial, tech, construction, energy, andengineering businesses make in managingtheir payrolls:1. Failing to automate yourengineering businessPutting this one right on top of the list makessense because poor systems and controlsare the root cause of most of the other payrollmistakes listed below. If you don’t have anautomated system in place, you can easilymake errors in calculating employee salariesand deductions, and in recording employeeinformation and transactional data.Failing to automate also means the payrollteam spends most of its time on compliance80
and admin issues, when it should ideallybe focusing on helping the engineeringbusiness understand payroll costs, identifytrends, enable better employee experiences,and provide strategic advice to finance andmanagement teams.2. Not putting checks andbalances in place to yourengineering businessPayroll fraud is a major risk for engineeringbusinesses today and is often discoveredby accident, only after the company has losta vast amount of money. Many small andmedium-sized businesses are vulnerableto payroll fraud because they don’t putappropriate checks in place. For example,they often give one accountant or payrollmanager complete access to the payrollsystem and company bank account. Thesimplest way to prevent most incidents ofpayroll fraud is to enforce segregation ofduties in the payroll department. Employeescalculating pay rates and accumulatedhours for payroll should ideally not be thesame people who process the payments.Different people should have responsibilityfor capturing payroll data and for managingaccess to the system as well as addingand removing employees from the payroll.Yet another person could be tasked withchecking whether the numbers add up.3. Poor control over leave daysIt can be all too easy to lose track of leavedays if an employee takes leave withoutproper authorisation. The likely outcomes ofsuch irregularities can be that an employeebenefits from extra paid leave or losesleave days due to errors in data capture,or that their available leave payment maybe inaccurately calculated when theyresign from the company. Other issues mayinclude two critical team members applyingfor and having their leave approved at thesame time, when at least one should be inthe office.An automated payroll system allows you toeasily process leave applications. It enablesyou to manage leave administration,enforce company-specific leave policiesand ensure the records are accurate. Youcan also introduce the employee selfservicemechanism to streamline leaveapplications and approvals for employeesand managers.4. Travel allowance pitfallsReimbursements and allowances foremployee business travel are a minefieldif you are not prepared. A travel allowanceis a regular monthly amount the employerpays an employee to compensate them fortravel in either a privately-owned vehicle orfor industrial, construction, technology andenergy engineering business related airtravel.It is better to persuade team members toopt for reimbursements rather than travelallowances simply because they are easierto understand. Once again, an automatedpayroll solution will do the calculations foryou and help capture the right data usingthe correct categorisation.Final Words from an EngineerThere is no reason today for payroll to bea headache or a distraction. Suitable toolscan help you take care of most of the redtape so you can focus on vital areas of theengineering business, such as growth,strategy and talent development.81
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