Efficient Ways for SMEs to Disburse Payroll to Their Employees

One challenge that every owner of a startup or a small- or medium-sized enterprise (SME) will encounter, especially in their starting years, is how to adequately manage their often meager financial resources. SME and startup heads, among everyone else, will learn how to practice the lesson of observing their financial priorities. An item that truly deserves to be at the top of that list is the business’s payroll system for its existing and incoming employees.

Efficient Ways for SMEs to Disburse Payroll to Their Employees

Ensuring that salary disbursement is accurate and on time is a fundamental part of running any organization. Without a functional payroll management system, the company may have to deal with employee dissatisfaction, high attrition rates, and low morale, ultimately affecting its reputation and productivity. Upgrades to businesses’ payroll management systems also matter, as the kind that relies on manual processing methods can be time-consuming, error-prone, and costly to use. 

To meet salary obligations more effectively, smaller businesses should consider investing in an automated online payroll system and implementing modern best practices for disbursing salaries to their employees. Here are a few tips to achieve just that:

Set Up Automatic Disbursements

Setting up your HR payroll system to automatically disburse payments will further decrease your administrative burdens and reduce the risk of expensive errors. In the Philippines, SME-focused finance tools like Maya Disbursements can be set up to seamlessly facilitate automatic payments to employees, suppliers, and business partners. Maya Disbursements, a product from leading fintech company Maya, is highly recommended for Philippine small businesses as it offers a full range of features specially designed for local challenges.

Implement Direct Deposits

Direct deposit is a secure and convenient way to transfer employee salaries directly into their bank accounts. This method eliminates the need for handling physical checks while also reducing administrative tasks associated with payroll processing. 

Switching to a direct deposit system is usually worthwhile and you should consider helping unbanked employees secure their own bank account even if you’re not legally obligated to. The Philippine payroll system follows two payroll cycles a month, so switching to a direct deposit system should dramatically reduce the burden on you, your HR team, and the rest of your employees. Many employees may actually prefer this method, as it saves them from having to make a trip to the bank and is more convenient than direct cash payments for larger amounts.

Choose Well-Supported Payroll Solutions

When it comes to disbursements, SMEs have no shortage of options to choose from. What’s more, many of the available tools tend to offer similar levels of functionality, at least on paper. In reality, the experience of using different tools can vary widely, with some featuring unintuitive workflows that serve to complicate your disbursement. 
 
With this in mind, take some time to shop around and test different options. Be sure to listen to what your HR team has to say about the different tools and choose payroll solutions from providers that offer better customer training and support.

Consider Your Regular Disbursement Needs

Apart from regular salaries, your disbursement solution should also be able to cover other categories of expense reimbursements. At the very least, it should also be able to facilitate bonuses, incentives, and allowances alongside regular salaries.

Know When to Consider Custom Payroll Software

Scenarios like regular cross-border payments and multi-currency transactions may require you to invest in a customized payroll software system. Having a specialized tool on hand may allow your finance team to avoid clerical errors while also ensuring better operational continuity. However, if these complex transactions occur infrequently, it may be a better idea to stick with a more reliable off-the-shelf solution and handle outlier issues one at a time.

Embrace Mobile Payment Solutions

Mobile payment solutions are set to become a dominant form of payment in many emerging markets, including the Philippines. Given this development, you may want to consider adopting mobile payment platforms that allow employees to receive their salaries directly to their preferred mobile wallets.

Some providers, like Maya, offer the option to use cards alongside these mobile payment solutions, which allows employees to access their funds from either their e-wallets or through connected ATMs. This approach is particularly useful for smaller businesses with younger workers who may not yet have their own bank accounts but want the option of withdrawing their salary payments either digitally or through cash.

ALSO READ: How to Schedule Your Work Day for Best Productivity
 

Take Steps to Keep Salary Details Secure

Salary details need to be kept safe to prevent fraudulent activities. To ensure that only authorized personnel handle payrolls, consider using biometric authentication to prevent unauthorized parties from accessing online tools or rooms where administrative work is being completed.

Stay Compliant with Tax and Labor Regulations

Payroll processing must comply with various tax regulations and laws. Choosing a payroll solution that offers effortless legal compliance helps reduce your legal risks and improve your business’s reputation.

Consider Outsourcing Your Payroll Operations

If you don’t have the resources to maintain a full-time payroll team, it may be time for you to explore outsourced payroll services. While reliable services can be costly upfront, you’ll enjoy guaranteed service levels as well as seamless legal compliance in return. Depending on your specific needs, outsourcing your payroll operations might even be the more financially sound option.

Adopting efficient disbursement methods will not only save your startup or SME time and resources but it should also foster employee loyalty and support the long-term growth and success of your business. As daunting as the shift to an automated system might be, investing in a better payroll solution is ultimately an investment in your company’s future.