If payroll frauds are left undetected, they can potentially cause a major financial loss to a business.
As an organization develops, data security becomes one of the important factors. Both employers and managers turn out to be increasingly worried to shield their business from tax-related mistakes or data breaches. According to a recent study, a small incident related to payroll fraud lasts for 2.5 years and even leads to financial drainage of $63,000.
Fortunately, we have a number of payroll and HR software to solve this problem today. Needless to say, the right software can not just improve security but also ensure accurate payroll processing. Such software secure a business from the following payroll frauds:
Time Theft
One of the most common frauds, time theft is also termed as time sheet falsification. It happens when employees report more working hours than they really did, thus increasing their paycheck.
Now, if an employee works for extra 30 minutes, it may not sink any business. But when the time theft is 1 hour or more, then a business will surely have to pay a hefty cost later.
When payroll software are integrated with the time and attendance system, a company can not just avoid this fraud but also reap several other benefits. In addition to this, HR managers can also review and check the accuracy of the data just to be double sure.
Malicious Intent
A company should always choose one of the best payroll software available in the market. Such software factors in encryption capabilities that provide additional protection level to both the firm and its valuable data.
Furthermore, it also includes security measures and authentication steps that allow a business to secure its sensitive information being used by any unauthorized parties with a malicious intent.
Plus, most of these software also protect a workplace database from various security breaches such as viruses, spyware, malware, hackers, etc that can devastate an organization.
Ghost Employees
As the name suggests, ghost employees are individuals who no longer work for the company but receive their paycheck without any fail. This fraud can happen in two different ways, ie.
- When an ex-employee is still being paid
- When an existing employee is paid twice every month
Both ways, they will be called ghost employees. This majorly happens when a firm doesn’t carry out an effective off boarding process. A research stated that only 14% of leaders agreed that their firms have a good on boarding process. With an ineffective on boarding process, a firm is likely to forget some vital steps such as omitting the employee’s name from their payroll system. This is when a comprehensive payroll and HR software come into play. Such software ensure a fixed process for every exiting employee. So, no steps will fall through the cracks.
Audit Security
This is one of the top reasons why a company should have payroll software in place. Calculating a business’s income and expense reports can be really time-consuming and tedious if done manually. But payroll and HR software make this whole process super easy and even save a large chunk of time.
Today, one can find a number of cloud-based payroll software that automate the calculation of employees’ payroll, benefits, bonuses, retirement, and tax-related costs with a high degree of accuracy.
Even when tax codes are amended, such software remain up to date, thus processing payroll taxes with zero error. In order to stay compliant, it helps a business to calculate and process accurate reports. This ultimately protects a company from those hefty fines related to haphazard payroll calculations.
As mentioned earlier, not all software factor in security features, hence it is the primary duty of employers and HR managers to research and find out a range of different software before purchasing the right payroll software for their organization.
Lastly, payroll frauds may drastically impact the bottom line of a business. Thus, they should be ascertained and solved at the earliest.
