In one of my payroll design workshops for a global company, the payroll team was confident that they needed all the forty-odd reports that they were generating currently to be available in the new system because the company’s headquarters (HQ) needed all those reports to be sent every month. After discussions with the project sponsor and the HQ Payroll Lead, it emerged that many of these reports were not even being looked at by the HQ. Finally, more than half of those reports were dropped in the new design because they were either not needed anymore or the information currently displayed in multiple reports was available in a single report now.
Companies who are changing their payroll systems after many years may have a lot of existing reports. Sometimes reports are added to check some of the complex calculations. New reports may have been introduced for checking, for the existing system may have had a bug and the payroll team would have wanted to be doubly sure after it was rectified. It is time one questioned the purpose and consumption of each report while transitioning from one payroll system to another.
If you are wondering what the most critical reports are, here are some (excluding the ones mandated by local statutory bodies) that will be needed by a payroll team:
- Payroll Register – A good payroll register must have the key employee attributes that are essential to the payroll calculation (e.g. department, position, job grade, joining/ leaving date etc.) and also the computed value of each wage type in columns. There should be options to sort, group by and generate subtotals easily.
- Headcount Reconciliation Report – For organizations that have many legal entities, and have employees frequently move from one entity to another (such as retail and hospitality sectors), this could be a crucial report, to ensure that the employee is being included in the correct pay group and no payment is missed out. Options should be available to classify all new hires/rehires, separations, transfer in, and transfer out cases.
- Payroll Variance Report – This report should be able to compare the result between the current pay cycle and the previous pay cycle or any past pay cycle. The report should be intelligent enough to display the reason for a variance so that the payroll team can ignore explained variances. An option should be available to generate this for a selected wage type and the reason for the type of variance.
- Bank/Cheque Listing Report – This report is used to tally the total amount to be remitted to the bank with the individual employee net pays and to validate the individual employee account numbers (if required). The report should have options to generate it for a specific payment method, e.g., bank, cheque etc.
- Earnings/Deductions Report – This report can be used to list out the amount for a specific or a group of earnings or deductions. The report can also double up for use to send information to 3rd Like, the cafeteria deductions list could be generated and sent to the Cafeteria Accounts team.
- Final Payment Report – This report generates the final payment summary for separation cases and may include end of service benefits, leave pays, notice payment/ recovery, bond recovery amounts to assist in the full and final settlement.
- Salary Accounting Report – Whether you have a direct integration between payroll and financial systems or you create a manual payroll accounting journal, this report is useful to validate the debit/credit amount summarized against each account code and other chart fields.
- Payroll Audit Report – This report traces the inputs that impacted the payout. These could be changes in employees’ personal particulars, job assignment, compensation, overtime, absences, expense reimbursements or even benefits in kind. Such a report should be able to identify changes that impacted the current pay period, or triggered a retroactive calculation or would impact a future pay period. This will help the payroll team to ensure that all necessary inputs were captured correctly and translated to the payroll.
These would be the main reports. Working with a minimum set of reports not only saves time spent by the payroll team on report generation but also reduces the system maintenance overheads and simplifies technical support. So, the next time you have a report requirement, do assess if the information is already available in another report. If the information required is a one-off need, do look for on-screen views that could suffice the need or use ad-hoc reporting tools.
Want to know what the other best practices are?
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