Finance relies on Payroll for information about one of the company’s largest expenses – wages and benefits. It is important that they receive this information quickly and accurately for business analysis and planning purposes.
There are four key items that accounting depends on Payroll to provide to ensure accurate journal entries.
1. Cost Centres for All Wages and Benefits
For all wages and employer paid benefits you will need to have the associated cost centre for the expense incurred. You must also take into account any employees whose salaries are split between departments or hourly employees who charge their time to multiple cost centres in a pay period.
2. Accrued Liabilities
For entitlements like vacation and sick time you will need to track the liability at the end of each pay period, to record the value owed to employees but not yet paid.
3. Manual or Off-Cycle Payments
Occasionally you may need to produce manual or off-cycle payments for employees, either because of pay adjustments or employment terminations. Accounting requires the adjusted GL entries for all adjustments and additional pays.
4. Expense Accruals
When a pay period crosses over month-end, accounting often requires the journal entries for the portion of Payroll up to the last day of month even though the actual payroll is not yet ready to be processed.
If you are still manually creating your Payroll GL entries in Excel or manipulating files to get all of this data across to your Finance team, there's a better way!
Payroll software can be integrated with your company’s general ledger so that all Payroll information can be imported directly into the company’s main accounting systems. This allows you to turn time consuming manual tasks into a streamlined process that you can run anytime – whether it’s for an expense accrual or to update General Ledgers from an off-cycle run – providing your Finance team with timely and accurate journal entries. And with today’s technology you can connect your Payroll to your accounting solution with no or minimal cost associated to it.
More Time for Strategy & Planning
Once your Payroll journal entries can be transferred easily into your accounting solution you will have more time to generate costing reports that allow your business to better analyze wage data for planning purposes.
Keep On Reading
Check out our free guide on how to reduce your 6 most time consuming Payroll tasks.
About the Author
Marlo Hertling has worked with leading HCM organizations and has been helping Canadian companies implement HCM solutions for more than 15 years. She is the Vice President of People & Culture at Avanti Software Inc and serves as Avanti's HCM subject matter expert.More Resources by Marlo Hertling