Payroll Cutoff: Tips & Tricks forYour Business

Paying your team on time is fundamental in building a trustful atmosphere among your offline and online teammates alike. While most business owners or team leads seem to focus on the actual payday, a not so obvious date remains overlooked. Understanding what a payroll cutoff date is is essential for setting up a reliable payment schedule to keep your team able to plan their salaries.

What’s a payroll cutoff?

A payroll cutoff date is a day by which you need to start sending out salaries, so that payment processing is complete by the actual salary date. For example, if you plan the paycheck day to be March 13th and processing normally takes up to 2 days, then the payroll cutoff date should be March 10th.

The reason setting up and following payroll cutoff days is important is that receiving money on time systemically has a profound impact on the following aspects of your business HR practices.

• Delayed salaries mean potential penalties. In most countries, there are frequency laws in place that determine how often employees are to be paid. Not meeting the established deadlines may cause unnecessary interest to your business operations from the local labor inspections.
• Employees rely on regular paychecks. Clearly, your team plans out their financial obligations with a predictable pay schedule in mind. Letting them down by sending money in too early or too late can significantly deteriorate their satisfaction and even cause increased turnover.
• You have clear deadlines in your budget management. Selecting a day as your payroll cutoff automatically centers around all your other business processes. Knowing upfront that the day X is when you need to pull out a stack of money to send to your team helps plan ahead of time and collect the necessary amount at your own pace. However, if you wait till the last minute, you are likely to not only mess up your books but also make mistakes and even leave some people unpaid.
• The HR brand is at stake. Last but not least, how attractive you are to the talent is made up of not what you say about your business, but of what those who have worked with you share. Employee satisfaction is critical in establishing a long-lasting and proven positive HR image across the talent pool worldwide.

SLSBMB.com that pays their remote teams with EasyStaff shared that losing personnel was ‘a significant risk’, after traditional payment options were no longer usable. SLSBMB.com has been using EasyStaff for a period of over 12 months.

Payroll Cutoff. Best Practice

Software is your friend

The easiest way around payroll compliance is using software. Especially with remote teams, where people are located around the world, across time zones, you are most likely to have some HR software in place already. But when it comes to payment, you may be still struggling with fast and secure payments worldwide to your contractors and remote employees.

EasyStaff is the bridge between you, your team and secure global payments. EasyStaff is a contractor management platform that works as a B2B partner managed through a single B2B contract. With an API, it integrates with your HRM system to streamline payments and automate complex cross-border payments. You can set any payroll cut off date and rely on fast international payments to your teams.

EasyStaff works as a stand-alone, too. The cloud platform delivers payments to your team across the world thanks to the service’s resources in the global banking network.

Calendar-ize the process

Payroll cutoff is a day on your calendar that signals it’s time to pay salaries. How often you do payouts influences the amount of payroll cut off dates. In other words, there is a payroll cutoff to every payday. The general schedule is monthly, semi-monthly, biweekly, and weekly. So before you mark that day in your calendar, be sure it corresponds with the amount of paydays.

EasyStaff can accommodate any payment schedule. From regular monthly payments, to sporadic one-off transactions.

EasyStaff can accommodate any payment schedule. From regular monthly payments, to sporadic one-off transactions.

Talk to your team

Simply sending out a corporate email may not be enough to communicate the importance of following the payroll cut off date or dates. Your team is more likely to follow the schedule if they are aware of your reasons behind the schedule or why it is impossible to collect information and pay employees on the same day.

EasyStaff requires the recipient to upload their work results before they are paid. So receiving time cards of your employees or collecting any other proof of work is easy and simply unavoidable.

To every carrot, there is a stick

A payroll schedule, however accurate or considerate it is, is to be followed by employees, contractors and you, the business owner or top manager. So it’s important that along with payroll calendars, you also share the understanding of how important it is that everyone does their job on time. Beyond communicating the request to employees, you might also enforce these practices.

1. Listen to feedback. It may be that your team is not quite okay with the payroll cut off date you set. Try asking around, through an anonymous poll via a Google form, to evaluate the general attitude to the decisions made.
2. See the root cause. People might be okay with the cut off date you set, but… it just never works as planned. Someone’s always late, or something’s always wrong. You may want to look deeper than a Google form to see where the problem is.
3. Tangible consequence. Sometimes it is not that your payroll cutoff date is off-set. It is just that some people don’t see the importance of submitting their data to you on time. While it’s a radical measure, you might establish a fee for delayed data turnover. Say, if they are one day late, they are taken 1% off of their salary.

Conclusion

A payroll cutoff date is foundational in establishing efficient payroll operations and processing in your company. Disregarding the payroll cut off date may result in decreased employee satisfaction, mess in processes and lack of trust among your teammates. EasyStaff is your solution for fast, transparent and 100% compliant payments worldwide that matches your paycheck schedule and is easily integratable with most HRM systems. Join EasyStaff now to manage your payroll effectively and be a desirable client for the talent worldwide.