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3 Steps to Effectively Avoid Late Salary Payments

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Enable Group | Jan 27, 2023

For Employers ● 3 min read

Late salary payments are common in many companies around the world. However, this corporate practice should not be tolerated as late payments of salary that occur often and repeatedly is an indication that there is something wrong with the company’s system. Even a single instance of late salary payment may reduce the employees’ reliance on the company’s payroll and make them question their commitment to the organisation.

Indeed, frequent late salary payments can create a disengaged, unmotivated, and unhappen workplace culture. For this reason, it is imperative to make sure that you consistently pay your employees their salaries on time. To help you do this, here are some effective tips on how your company can avoid late salary payments. 

1. Track your cash flow

Cash flow monitoring is essential to understand the financial health of the company. It helps you gain an idea of your business’ incoming and outgoing cash flow and determine whether there are enough funds to pay your employees. Furthermore, accurate tracking of cash flow can assist you in identifying areas like assets and liabilities that might have contributed to a negative cash flow.

Concurrently, your company’s human resource (HR) department can make use of cash flow to monitor the performance and productivity levels of the employees. This will help the company facilitate the management of human capital, whereby its senior leaders may refuse to increase employee headcount or salaries if business outputs do not justify the same.

2. Communicate to your employees early

If you have a valid reason to pay your employees their salaries late, it is highly advised to communicate this matter to them as soon as possible. The purpose of this is to give your employees enough time to make the needed arrangements for their personal finances, such as their monthly rent, bills, household expenses, and more.

When communicating with your employees regarding financial matters, it is best to be transparent and upfront. Tell them the reason why their salary payments are delayed as well as the steps that the company is taking to solve the issue. As much as possible, provide them with an expected date of salary disbursement too. This will help reassure your employees that the company still prioritises their interests.

3. Periodically review your payroll processes 

A critical step in preventing late salary payments is constantly enhancing your company’s existing payroll processes. You can do this by re-evaluating the organisation’s internal processes every now and then. Periodic reviews of payroll processes help to determine bottlenecks within your company’s current operating process.

If cash flow was the principal issue, take measures to minimise the company’s long-term and short-term financial strategy. If the delayed salary payments resulted from erroneous payroll calculations, then you should consider engaging the services of payroll HRMS software to automate your organisation’s calculation process. By resolving problems periodically, you can reduce the chances of delayed salary disbursements in your company. 

Conclusion

Delayed salary disbursement is a poor corporate practice that companies should avoid as much as possible. No employee wants to receive their salary payments late. Besides affecting their personal budgeting and finances, late salary payments can also adversely impact the employees’ job satisfaction and motivation. Hence, your company is responsible for ensuring that the employees receive their salaries in a timely manner at all times.

Struggling to get your payroll process in order? Enable Consulting is the agency to turn to for help! We are proud to provide dependable and cost-effective HR services, including HR consultancy, HR advisory, and payroll management systems. Get in touch with us anytime if you’d like to outsource your HR in Singapore or discuss your business needs.


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