Keeping your payroll system accurate and compliant with Philippine law can be a challenge, especially given the country’s customary twice-monthly pay dates, which means you’ll be processing salaries every fortnight or so. It can be especially challenging for small- and medium-sized enterprises (SMEs) with limited resources, given the challenges of small business payroll management in the local setting.
That said, occasional small payroll mistakes are inevitable, and they will likely provide you with valuable learning opportunities for improvement. However, it's crucial to steer clear of major blunders that could potentially hinder the growth of your business. To help you navigate this important task successfully, we provide you with a list of seven payroll management errors that you should avoid at all costs.
1) Picking the Wrong Payroll Management System
In the Philippines, salary payouts are typically disbursed twice monthly, giving payroll teams little time to get things right between paydays. If you pick a system that isn’t suited for your business, it may lead to inefficiencies and disrupt the smooth flow of payroll processes.
To avoid such issues, make sure to choose a solution that’s appropriate for the needs of small businesses like yours. Maya Disbursements, for example, is the payroll system Philippines SMEs and startups depend on for fast and accurate salary payments and more. Use it to manage payrolls, employee incentives, allowances, and even loans, right on the Maya Business Manager Dashboard.
2) Missing Payroll Deadlines
Missing payroll deadlines is one of the biggest mistakes you can make as a business owner. Thankfully, with Maya Disbursements, you can set and forget any bulk payment, ensuring that your employees always get paid on time. You can even use the tool to manage regular incentive and loan disbursement payments as part of your employee retention program.
3) Not Including Allowances and Benefits
Most regular employees of private businesses are entitled to a certain set of allowances and benefits, some of which are mandatory under Philippine law. These include such benefits as the rice subsidy, holiday pay, night shift differentials, and mandatory government contributions to the Social Security System (SSS) and Pag-IBIG Fund. In addition, contract workers may be entitled to some non-salary benefits as well.
Failing to include these payments in your regular payroll can cause employees to be disgruntled and may even open your business up to legal action. Fortunately, you can also use Maya Disbursements to make these payments, ensuring employee satisfaction and compliance with local regulations.
4) Misclassifying Contractors and Employees
The compensation frameworks for full employees and contractors generally differ, and some employers have used this difference to save on their labor costs. While this is not necessarily a problem in all cases, it may open a business to legal risks if these distinctions are not made in line with the applicable labor laws. Unless you are absolutely sure that the law is on your side, avoid taking creative liberties with your employees’ legal status.
5) Miscalculating Compensation
This is a very common mistake in smaller businesses where payrolls are handled by non-specialists. Unfortunately, it can be a very costly mistake that also loses you your best-performing employees. If you don’t have the needed payroll management skills in-house, you should consider hiring an agency or outsourcing the task to an experienced individual.
6) Not Getting a Professional to Handle Your Payroll
Just because you can manage your business’s payroll by yourself, it doesn’t mean you should. In most cases, you’ll be better off hiring a professional who specializes in managing payroll for small businesses. Having such a person on your team will help make your payroll more efficient and free up more of your time for strategic business-growing activities.
7) Not Taking Legal Requirements Seriously
Underestimating the importance of complying with legal requirements in payroll management can have serious consequences for your business. To mitigate these risks, it's crucial to keep up to date with both local and national labor laws related to employee benefits and entitlements. Keeping up to date ensures that your employees are compensated fairly and your business is kept safe from legal action.
Enjoy Timely Payments, Effortless Payrolls, and More with Maya Disbursements
For always on-time salary disbursement, allowance management, and disbursement of loan proceeds, Maya Business is the best choice for your payment processor. With Maya Disbursements, you have a simple yet powerful tool for motivating employees and managing all your payments. Create your Maya Business Manager account today to enjoy the benefits of a modern payroll system for SMEs.
Signing up for Maya Business Manager grants you access to the Maya 1-2-3 Grow bundle. Maya 1-2-3 Grow gives you big savings with a 1% MDR (merchant discount rate) discount on all QR Ph transactions for 3 months after signing up. That’s equivalent to PHP 14,600 in transaction fee savings for every PHP 1 million in QR Ph sales.
The Maya 1-2-3 Grow bundle also gives you access to a Maya Business Deposit account for your transaction settlements. Your Maya Business Deposit has a depositor-friendly 2.5% per annum interest rate, which means that your business will earn PHP 25,000 a year on each PHP 1 million deposit. Maya Business Deposit also entitles you to zero maintaining balance and free transfers via InstaPay and PesoNET, saving you even more cash.
The bundle also automatically qualifies you for a Maya Flexi Loan offer of up to PHP 2 million in just 3 months, enough to improve your business’s internal processes. For higher-value loan offers, keep on using Maya as your wallet and card payment processor daily.
Sign up for Maya Business Manager today to enjoy the Maya 1-2-3 Grow bundle as well as industry-leading small business solutions like Maya Disbursements.
