6 Payroll Challenges and Their Solutions

6 Payroll Challenges and Their Solutions

Payroll management is one of the most crucial business processes. And to be honest –  it can be an intimidating task irrespective of the size of your organization.Keep reading to know about common payroll challenges & their solutions.

A common misconception that hovers over the process is that payroll is just about paying accurate salaries to employees.

The reality, however, is far from it. And because it is an extensive subject, it brings along various challenges.

The first step towards finding appropriate solutions to challenges in payroll processing is to recognize them.

Challenges in Payroll Processing

Today, we’ll discuss the top 6 challenges regarding payroll processing and management and ways you can adopt to eliminate them.

Manual Processing

Many organizations are still of the belief that manual processing of payroll can save them costs. And I won’t blame the organizations for this.

Manual processing may look like its saving costs as there’s no upfront investment on payroll software or other electronic software. All you need is some papers, a laptop, and a calculator to manage payroll manually.

This setting may seem cost-effective but is highly dangerous and costly in the long-run. Why? Because to err is human and you’re bound to make miscalculations, errors, and duplications.

And doing it wrong will incur more cost than you intended to save.

It’ll also be difficult and time-consuming to produce, process, and share reports.

A manual process is not only risky but also dangerous. Because you’re dealing with a highly sensitive set of data, and manual ways have no measures in place to secure the data.

Solution: Automate the process. It is only by leveraging payroll software that you can put an end to this challenge.

Payroll Challenges : Payroll Compliances
Payroll Challenge: Payroll Compliance

Payroll Compliance

Compliance is one of the biggest challenges of payroll process. There are numerous standards that must be followed when handling payroll. The laws keep changing regularly and to be aware and keep up with the evolving regulations is not easy. Compliance in payroll also encompasses taxation compliance.

It is mandatory for employers to withhold income tax from their employees but the rules regarding it keep on changing.

Not meeting these standards can result in high costs through fines and penalties. And how is it better to make yourself aware after the problem occurs?

Also, most of the businesses are bent on handling payroll by themselves or by leaving the process on the HR department. What you need to understand is – no matter how much time you invest in understanding the laws, they’ll change and you’ll be back to square one.

One of the major reason for this challenge is – not assigning the task to the right people.

Ultimately non-compliance can be a threat to the organization as it not only incurs fines and penalties but also invites unwarranted legal actions and costs your organization – its reputation.

Solution: The only way of handling these payroll challenges is to entrust the responsibility of your payroll on the right people – the experts, the ones the have years of experience backing them up.  

Explore : Payroll management services


Uncompromised accuracy is where most of the businesses fail when it comes to payroll management. And we all know accuracy in payroll is of prime importance.

Payroll process involves work in batches where regular updations have to take place. Then there are situations of incentives, hikes, promotions, and miscellaneous employee expenses where chances of errors multiply.

All this adds to the pile of confusion and ends up in errors that can cost an organization its reliability.

Solution – Don’t make the mistake of handling payroll manually. Trust the experts to nullify the chances of errors and eliminate loopholes in the process. Also, individuals with expertise will be quick to identify and correct the errors, if required.

Also Read: Employer Payroll Taxes in India

High costs

They are numerous ways by which Payroll can attract high costs. In pursuit of efficient management, organizations switch to online platforms. Now, these platforms have a high upfront cost and require a dedicated employee to manage it.

The platforms need to be maintained and updated – it requires time and cost.

For all this to function smoothly, you’ll have to invest in an in-house IT team. You’ll also have to train the employees for keeping up with the compliances and administering payroll and taxation. So, you see how payroll management can be costly even if done right and for most organizations, this cost is considerably high.

Solution – Outsource the process. This is one of the best ways to make your payroll management cost-effective.

Also Read: Payroll Myths


Payroll data contains highly sensitive information about your organizations and you cannot risk it in the wrong hands. As data becomes our biggest asset, the threat to its confidentiality is intense than ever before.

But how do you always ensure its 100% safety? And you know what happens if this data reaches the wrong endpoints! It can cost you- your organizations. This creates a permanent cloud of stress over organizations.

Solution- You need to assign payroll management not only to those who have knowledge about the subject and its statutory aspects but also have the necessary skills to handle sensitive information.

Also Read: HR Consulting Firm in Delhi

Added Burden

You and your employees have to face an added burden of handling payroll. Many organizations make the blunder of taking payroll all upon themselves.

This not only hampers their ability to solve other pressing problems but also affects the organization’s larger goal.

Payroll is an exhaustive task and it adds to the already burdened team which further leads to mistakes and loopholes.

Also, a business owner has a lot to take care of, by adding payroll to the list, there’ll be many other crucial tasks that’ll be left unattended.


Leave the process in the hands of experts. There’s no point overburdening yourself as it will affect all the other processes of the business.

Wrapping up – I’ll leave you with a tip.

Here’s an ultimate way to overcome all the aforementioned challenges –

Also Read: Operative Roles of HR in Company

Outsource Your Payroll Challenges

By hiring payroll management services you can effortlessly eliminate all of these challenges. How?

HR outsourcing firms have expertise solutions especially meant to handle the intricacies of payroll.

Let’s quickly go through the challenges and see how with outsourcing it wouldn’t have been a challenge in the first place

  • Manual processing – HR outsourcing firms incorporate the latest technologies to handle your payroll so the case of manual processing does not occur.
  • Confidentiality- Outsourcing firms are professionals who have the means to prevent a data breach at all costs. There’s also a confidentiality agreement to keep legalities intact.
  • Compliance – They are experts who are well versed with the updated versions of rules and regulations so your payroll will always be compliant to the standards.
  • Accuracy – There’s a team of dedicated professionals just to handle your payroll. Any error/loophole is prevented or corrected at the earliest.
  • High costs – When you outsource the process, you only pay for the work done. You do not have to invest in the software or the team to handle it. Neither you’ve to train the employees from scratch. All this proves the cost-effectivity of outsourcing
  • Added burden – With your payroll process in expert hands, you’ll have nothing to stress or fear about. You can now focus on tasks that you do best.

Happy Outsourcing with best payroll outsourcing company in India- Easy Source India

Payroll Challenges Related Articles

Looking for HR Solution for Your Company?
Consistent HR support without hiring full-time HR
Hire Best HR Consulting Services

Looking for Manpower Management Solution?
Contact for manpower outsourcing Process, HR services and HR recruitment
Hire Manpower Outsourcing Services Company