How often employees are paid within their company is known as their pay frequency, and how yours is set could contribute to something most small business owners dread...employee turnover.
Pay frequencies are typically scheduled weekly, bi-weekly (every two weeks), semi-monthly (twice a month), or monthly. Some other special circumstances enable pay frequencies outside of these, such as quarterly and others, but most non-owner, non-corporate officer employees, will fall in the weekly to monthly range.
As an employer, hiring on your first employee, you have the opportunity to set your pay frequency (which can later be changed) - but here a few things to consider:
Some states mandate weekly pay for employees within certain job categories, such as manual labor, and not abiding by these rules could result in penalties. Why is this?
And Why are payday loans popular?
Cash flow is extremely important to small business owners, but just as important to the households of employees. Think processing your company's payroll twice a month versus weekly is a good idea because it could be slightly cheaper with your payroll company? Or maybe it's easier on your schedule? It might be pressuring employees to look for other employment.
Believe it or not, it's very common within the medical staffing industry to offer employees daily pay. Nurses and other medical professionals have switched from one staffing company to another simply because they can get their pay daily instead of at the end of the week.
Turnover may not be a case where employees aren't being paid enough - just not often enough.
None of this means that you should pay your employees every day or even every week, but it's important to note. The cost of an employee leaving the company could far exceed the cost or time savings of a less frequent pay schedule.
Ultimately, choosing a company pay frequency likely comes down to the types of employees you'll be employing. Don't be afraid to look at pay frequency as a retention tool, as believing the opposite (that it doesn't matter), could potentially cost you employees.
Sunday, February 6, 2011
Tuesday, February 1, 2011
Preventing Payroll Fraud When Using a Payroll Company
The court case outlined in the link below deals with the issue of liability when payroll fraud is attempted when using a payroll company.
Is this case, the payroll manager at a small business would call in the company payroll to the payroll company. The payroll manager would call in multiple payrolls each week (instead of just the one normal payroll), and issue herself multiple direct deposits. The payroll company was not liable to reject the payroll manager's request since she was listed as a contact on the account who could call in payroll.
The business tried suing the payroll company for the amount the business' payroll manager embezzled through payroll fraud.
The court found that the payroll company was not liable as they had issued financial payroll reports to the company and that the company owner did not review the reports for discrepancies.
The opportunity for payroll fraud can be more limited when using an outside payroll company because of these payroll reports. Payroll reports from in-house systems have the potential to be modified (a payroll check issued and then wiped off or left out of the payroll reports). Payroll reports from payroll companies are canned - so when an employee gets two pay checks it will be there in plain sight.
Most payroll companies can have reports courier delivered and received by signature only. They can also separate the reports from the live checks and have them delivered to separate locations. Even one step further, some payroll companies can deliver electronic copies of the reports via email.
One or all of these options could be taken by the owner/CEO/CFO of the company as a checks and balances system to eliminate these kinds of payroll fraud opportunities from happening - provided the reports are reviewed, of course.
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