BIS CASE STUDY- Pay Roll System

Introduction:

Pay rolling is the business practice of referring a contingent worker to a staffing vendor or pay-rolling provider so that they are the employer of record responsible for employer taxes, payroll, and all legal matters pertaining to employing workers. Different from sourcing (or recruiting) where the staffing vendor uses internal recruiters to locate contractors on behalf of the requesting company or client, pay-rolled workers are identified by the client.

Often pay-rolled workers are known to the client from previous engagements or as former employees. Because the costs of recruiting workers in to contract positions are eliminated the pay-rollees are often processed at reduced mark up rates.

In the last several years some dedicated pay-rolling companies have emerged in the staffing industry to provide pay-rolling services at greatly reduced pricing around the world. All this has resulted due to the usage of computers widely in this field. Computers have been of great help to man in dealing with accounts and finance in all possible ways.

Background:

Open source software:

Open source software is software where the ownership of the copy is transferred to the end-user and ownership of a particular copy of the software and does not remain with the software publisher; however the ownership of the copyright remains with the software publisher, the source code is also available to the user. Open source payroll software helps the user to make modifications in the software to adjust to company requirements. This helps the management to use the software without much difficulty and effort to understand each program as it has been customized according to its needs. In an open source payroll software redistribution of modifications is also allowed.

Computer payroll software:

It is a payroll software user friendly computer payroll program. Computer payroll software manages your entire payroll, calculates your payroll, including the deductions and withholdings for all relevant tax jurisdictions. Prints and maintains the paychecks, vouchers and payroll reports.

Today almost all businesses require efficient and effective payroll software to manage its employee’s wages, salaries, bonuses and overtime. A business which does not employ a payroll package cannot do with managing its employees in a proper and effective way which may result into employee dissatisfaction which may be harmful to the business in a long run. So it is very important for a company to implement payroll software in its administration to keep a healthy relationship between the employer and the employee. Business payroll software is exactly what a business needs to bridge the gap between a healthy environment of employee- employer relationship and dissatisfied employees. Business payroll software maintains employee records, payroll reports, overtime and bonus reports etc.

Phase I

Study Process - This process allows Computer Home to understand companies' payroll policies in order to implement the project successfully. It consists of interviews conducted with key personnel in the HR and Finance Department to understand more about the following:

• Payroll policies
• Processes workflow
• Data preparation for payroll processing
• Reports generated for distribution and filing
• Time and processing cycle requirements

Documentation - Documenting companies' monthly payroll process procedures. This process documents the procedures for your monthly payroll processes after Computer Home completes the first stage. The document will round up the following procedures responsibilities:

• Manage payroll policies
• Stipulated monthly cut-off date
• Define how transactions will be forwarded to Computer Home for payroll processing
• Generation of reports for distribution and filing
• When are the pay-slips updated
• Allocation of bank to be used for crediting employees' salaries
• Delegated person responsible for sending the bank diskette to the bank, statutory submissions and answer employees' queries.
• Designate formal communication channel between the company and Computer Home
• Measures to safeguard the payroll date

Phase II

System Configuration - The objective of the system configuration process is to do a proper set up for the system with default settings compliant with the company's requirement. This process delivers transition to production readiness and production cutover. Once that is done, the company's project team will take over the production support.

Data Conversion - The data conversion process defines the tasks and deliverables required to convert your employees' database. The objective of the data conversion process is to convert and test all data that is available and feasible then obtain the necessary operation of new applications. The first step of this process is to explicitly define what data is required for conversion.

Parallel Run –Computer Home will perform parallel runs to ascertain that the payroll computation is consistent with the companies' existing payroll computation. By comparing payroll reports generated from Catalyst HRMS and your existing payroll application, we will be able to fine-tune all inaccurate and incorrect settings on the payroll application.

Training – Computer Home will provide user training to key personnel involved in the outsourcing project. The user training will focus on online approval of time sheets and claim forms, submission of payroll transactions to Computer Home and downloading and viewing payroll reports.

Live Implementation - Live run will commence upon the completion of the implementation processes

Advantages and usefulness of computers:

Monthly Payroll Processing.

·         All authorized input forms and interface files will be forwarded to computer Home for input of new employees, resigned Employees, allowances & deductions, overtime hours, salary adjustments and change of bank account no.

·         After the data has been entered, an audit trail will be generated for checking against input forms.

·         After checking, Computer Home goes on to process the payroll.

·         Bank diskettes/emails are generated for salary crediting.

·         Electronic pay-slips are generated for employees every month.

·         Computer Home generates regular, timely reports on the following: - Detailed Payroll Register by employee - Summarized Payroll Register by branch and department - Net Pay Summary, including payment method - Salary Reconciliation Report - PF/ESI/Professional Tax – Income tax Queries of the employee will be handled by Computer Home

Outsourcing Benefits

·         Real Time Management - Reports can be made available to companies so that they can react to and control excessive overtime and claims. Important decisions can be made and executed in a timely fashion and this reduces turnover, rehiring or retraining.

·         Minimize External Costs - No additional costs required for software licensing, upgrade or maintenance and companies save on license charges that are applicable for end users.

·         Relive Laborious HR Tasks - Free your HR department of tedious and time-consuming administrative work such as data entry, info digging, matching and updating. Outsourcing reduces companies' burden of tight payroll deadline and takes away operating headaches of data polling, updating, checking and backup. This in turn allows the internal HR department to focus on productive HR activities such as manpower, compensation planning and settle union grievances.

Recommend Best Practices: Upon understanding and documenting the companies' payroll processes, Computer Home recommends industry best practices to streamline your processes to increase productivity and efficiency. Our recommendations include:

·         System customizations

·         Re-engineering processes

·         Introducing automation

Design Input Forms - In this process, both parties design input forms, which will be forwarded to Computer Home for payroll processing. The input form may take on many variations to accommodate different situations, for example:

·         New Employees

·         Resignations, including date resigned and any allowances or deductions to be processed

·         Promotions, including date promoted, new salary & effective date and any new allowances to be paid

·         Transfer, including new department & effective date and any new allowances to be paid

·         Allowances / Deductions to be processed

Prepare Schedules - Preparing annual payroll schedule – Computer Home will prepare a schedule for the year, ending 31 March, with exact dates for the submission and/or approval of:

·         Payroll transactions to Computer Home

·         Payroll reports to the company

·         Payroll reports and payment for outsourcing services and salaries

·         Salary crediting to bank

·         Statutory submission to the concern authorities

 Problems and their solutions:

Solutions in this category address comprehensive accounting needs: they help record, organize and interpret the financial transactions of your business. So be a “Master of the Balance Sheet” and have it all at hand, with the ability to drill down details instantly. Keep track of your numbers in every form – statements of cash flow, balance sheet, income statements and more. Hence the computers help in keeping a track on the followings:

·         Keep an uniform database for all accounting needs

·         Keep track of daily, monthly and annual accounts

·         Keep track of inventory details such as vouchers, slips, order forms, delivery forms and more

·         Plan your future business budget

·         Be organized and ready for easy auditing

·         Keep track of performance data about your business