Off-cycle payments are a bit of a necessary evil for payroll professionals. Whether you have to issue a bonus, provide termination pay or correct a payroll error, off-cycle payments are stressful, time-consuming and an all-around pain to deal with. Let’s explore the top three challenges that come along with these annoying little outliers and how best to handle them:
1) Off-cycle payments can create a lot of administrative burden.
You have your routines and processes in place. You live and breathe by deadlines, schedules and tight organization. And then off-cycle payments pop up along the way, totally disrupting your flow. It’s the worst! Sure, you want to make sure bonuses get into the hands of deserving employees and that you correct any errors you or your team may have made when processing payroll, but doing so off-cycle can grind your workflows to a screeching halt and add many tiny tasks to your to-do list.
So how can you ensure that employees get the money that’s owed to them in the most efficient way possible? Many companies have implemented policies to reduce the administrative burden of off-cycle payments. For example, a company policy might be that if a payroll error was only a certain small percentage of an employee’s paycheck, the remainder will simply be included in the next paycheck. Bonus checks may also be included within regular paychecks, as long as they are taxed carefully and correctly. See what works best for your team and your employees so you can create policies to make these processes as efficient as possible.
2) The costs of paper and overnight postage can really add up.
Since 93% of U.S. workers now receive their pay through direct deposit, so many of us forget how much paper and postage can cost, especially when you’re dealing with a large number of employees. One advantage of life in the digital age is that we are greatly reducing the amount of paper we consume as a culture. However, some off-cycle payments require you and your team to overnight checks via mail to employees or ex-employees.
Many states require termination pay to be submitted to the employee within 24 hours. Not only does that create a fire for you to put out, it also can be very expensive to mail, costing an average of $12-50 dollars per check. To cut down on these costs, which can easily be upwards of $50,000 annually, many companies are adopting digital payment solutions that have off-cycle payment technology built in. Not only do these new systems make it possible to send payments at the push of a button, they also eliminate the need for your employees to have to cash a paper check at their bank or check-cashing establishment, saving them time and money as well. You’ll also be saving a few trees in the process! These digital solutions are a win-win for you, your employees and the environment.
3) “Snail mail” leaves room for human error and other disasters.
Let’s face it. No matter how much we love and appreciate our mail carriers, there are still a lot of risks associated with sending off-cycle payments the old-fashioned way. We’ve all had those instances where we’ve mailed something and it was never received, or it came back to us with one of those frustrating “Return to Sender” stamps. Not only can things get lost in the mail, but the possibility of them being sent to the wrong address can cause even more issues. The last thing you want to worry about is re-issuing a payment that you’ve already sent out and having to pay for postage all over again!
A great solution to avoid this problem as much as possible is to send out periodic contact information requests to all employees. Having the most up-to-date information for their phone numbers, addresses and even emergency contacts can truly save the day in more ways than one. Keeping those records as meticulous as the hand-written address book your mom or grandma used can help you save time, issue off-cycle payments quickly and efficiently, and keep your processes as compliant as possible.
This year, the pandemic added another layer of worry, as paper mail is another thing that can potentially carry the COVID-19 virus. To avoid any potential risk associated with paper mail, discourage employees from interacting with their mail carriers up close, and encourage them to disinfect paper mail before opening it and to wash their hands afterwards. That way, you know you are helping them be as safe and germ-free as possible.
Do you have more “pro tips” on how to reduce the headaches associated with off-cycle payments? Please feel free to share your ideas below!