Payroll Challenges and Solutions for HR Managers

Payroll processing has always been a tedious, labor-intensive, and error-prone process. While payroll software was initially viewed as a luxury, companies of all sizes have now recognized that payroll automation is a necessity, not a luxury. Payroll processing is, at its core, a tool for providing employees with accurate, timely compensation for the work they’ve performed. So how can you overcome its biggest challenges?

Reasons for the Excessive Effort and Cost of Preparing Payroll Using Traditional Methods

According to studies, 26% of small business owners who prepare payroll manually spend three to five hours per month on payroll processing, while 40% of business owners spend 80 hours or more annually on taxes and payroll processing. Therefore, automating payroll processing represents a significant leap forward for any company in terms of increasing productivity and reducing the monthly workload on human resources managers, as it addresses multiple issues, the most important of which are:

Lack of Standardized Data Sources 

One challenge HR managers face when preparing payroll is the variety of information sources. For example, various factors affect payroll processing, such as advance pay, loans, financial claims, and more. Payroll processing also relies heavily on attendance and time-out data, which are among the biggest factors affecting payroll. This data is typically extracted from fingerprint scanners or daily attendance and time-out logs. 

Errors and Gaps in Existing Information 

Because relying on multiple sources makes errors and gaps likely, minimizing errors, gaps, and issues during payroll preparation requires a fully automated payroll process linked to accurate, up-to-date data on the factors that drive payroll calculations.

Multiple Stakeholders and Overlapping Responsibilities in Payroll Preparation 

In traditional payroll processes, tasks overlap among HR operations, HR managers, and finance and accounting staff; in some cases, approval of payroll may even reach the administrative or executive director. This overlap makes it difficult and time-consuming to produce payroll statements and results in unnecessary time and effort spent on the approval process.

Failure to Integrate Payroll Processes with Required Government Platforms 

As digital government advances, government systems and platforms now oversee or regulate many tasks related to employee entitlements and compensation, such as Mudad’s Wage Protection System and social insurance. To avoid fines and errors caused by inaccurate payroll data entry and the lack of a reliable data source, companies must take these violations into account, including: 

• Paying an employee’s wages more than once a month, in which case duplicate entries are excluded; likewise, if an employee’s wages are not paid on time
• Deducting more than 50% of the employee’s base salary as recorded with Social Insurance 
• Increasing the salary registered with social security by 20%
• If the base salary does not match the salary registered with Social Insurance 

These and other violations can be avoided by implementing a payroll system that integrates with government platforms and helps you comply with Saudi labor regulations.

Why Does Your Company Need a Payroll Processing and Automation System?

Save Time and Effort

Human resources experts and specialists spend more than 30% of their time on repetitive administrative tasks such as drafting letters to employees and tracking leave, attendance, and absences, as well as the payroll preparation process, which is also very time-consuming when done manually due to the large number of steps and data points required—such as calculating overtime and allowances. Technology, however, offers valuable solutions for automating these tasks.

Investing in a good payroll management system enables you to complete your tasks in less time and with just a few clicks by automating the calculation of many inputs such as Social Security deductions,overtime pay, and electronically synchronizing attendance and absences with relevant devices—and then automatically integrating them into the payroll process. This also saves time on core HR tasks by integrating technology and digital transformation and gives employees self-service capabilities through mobile apps.

Increased Accuracy and Reduced Errors

When you enter and manage employee wages manually, human error is always possible. The IRS has imposed $4.27 billion in penalties on businesses because of errors in employees’ earnings and taxes. Errors such as miscalculating taxes, overlooking taxable items, relying on inaccurate information, and unfamiliarity with payroll processes can cost your company significant money.

Using a system like Jisr for payroll management minimizes human error, providing a better experience for employees, saving the company money, and ensuring employees receive what they’re entitled to while guaranteeing the accuracy and consistency of calculations, ensuring that salaries are paid in full based on key information and inputs, such as base salary, allowances, overtime, and deductions, which are automatically factored in during the payroll run, thereby preventing catastrophic errors.

Additionally, systems that comply with Saudi Arabia’s labor regulations, such as Jisr, are continuously updated to ensure full compliance with new labor laws and regulations.

Record and Data Maintenance

Maintaining manual records is often a daunting task for HR professionals. Using different files and locations to store employee data is not only insecure but also takes time away from more important tasks. One of a payroll system's most important features is security, since payroll data contains highly sensitive information. This data is kept confidential within the system and can be securely stored using cloud computing, eliminating the need to handle hundreds of paper copies every month. The system also manages access permissions. Furthermore, users can access and retrieve information quickly and easily with just a few clicks.

In addition to providing an extra layer of security for the organization’s and employees’ data, cloud computing also facilitates access to this data—whether for the HR team or even the employees themselves when needed—while conserving the organization’s resources, such as paper and printing, thereby preserving and protecting the environment.

Easy synchronization and integration with the systems you need

Effectively integrating the systems you use within your company is important, and payroll systems typically offer integration and synchronization options with other systems. This helps organizations save time and effort by eliminating the need to perform tasks manually or re-enter data into each system, facilitating effective collaboration between departments and teams.

Human resources systems, such as Jisr, can integrate with fingerprint scanners to capture employees’ fingerprints directly. The system can be connected to multiple fingerprint scanners across several branches simultaneously, featuring a user-friendly interface, and can support multiple shifts per day, helping to improve work performance and decision-making—all of which can be easily achieved through the Jisr system.

Jisr also integrates with well-known third-party systems such as Microsoft Dynamics and Xero, working as a single, integrated human resources management system tailored to the Kingdom’s labor regulations.

Essentials Your Company’s Payroll System Must Have

To better understand how a payroll solution works, here are some essential features your payroll software should have: 

Payroll Processing and Preparation

This is the most important function of a payroll system, involving payroll processing and management. Simply put, this function ensures that every employee receives their salary correctly via their preferred payment method. The payroll system should also allow users to download and print various payroll forms.

Ease of Use

The main goal of a payroll solution is to save time on payroll preparation, especially since time is one of the most valuable resources successful companies invest wisely. An automated payroll system eliminates the need to spend much time preparing payrolls and is designed to be easy to set up and use.

Compatibility with Accounting Software

Instead of the accounting department manually entering payroll entries into accounting software—a process that can take several days to complete the entire payroll cycle—the payroll system should integrate with accounting software to ensure the accuracy and validity of entries automatically imported into it.

A good payroll system provides fully automated, ready-to-use accounting entries, including bonuses, deductions, and salary adjustments, helping the company avoid data entry errors and saving time and effort in creation and review. It is also compatible with the most popular accounting software commonly used by companies.

Direct Deposit

This feature is one of the most important aspects of the payroll system, as it deposits salary directly into the employee’s bank account, eliminating the significant routine expenses associated with traditional salary transfer methods. It also gives employees an immediate, convenient way to receive their pay and reduces the risk of fraud or manipulation between payroll processing and the employee’s actual receipt of pay.

Direct deposit ensures funds transfer from the company’s account to the employee’s account on time, seamlessly, and without delay—without the company needing lengthy banking agreements or complicated procedures—creating a win-win for both the company and the employee.

High Level of Accuracy

When automation replaces manual work, the likelihood of error drops to zero—which is exactly what payroll managers need. Even a slight misplacement of a decimal point or an extra zero can cost the company dearly and create data discrepancies that are difficult to trace. For this reason, automated payroll systems offer a crucial advantage: accurate entries and processes. This means that the shortfalls or overpayments typically encountered in manual payroll processing—due to errors in entering accounting entries—will no longer occur. In contrast, automated payroll ensures the accuracy and validity of the data prepared and uploaded to the company’s accounting software.

Robust Security

Payroll data is among a company's most confidential and sensitive information; therefore, it must be protected by robust security measures that shield it from prying eyes and malicious actors. The payroll service provider should ensure complete security for the company’s data in one of two ways: either through cloud technology, which is highly secure as it stores data on multiple servers, safeguarding it from damage or loss in the event of a natural disaster or a break-in;

The second method is to host databases locally on company-owned servers, without involving any third parties. The payroll system can protect the confidential database—which contains detailed information about employees and their salaries—by assigning passwords and permissions that control access to this sensitive information.

Tracking Clock-In and Clock-Out Times

Clock-in and clock-out times naturally form the basis of the payroll process, as salaries are accurately determined based on the number of hours an employee worked at the company, the number of days of leave taken during the month, and the types of leave (paid or unpaid). Therefore, integrating an attendance and time-out system into the payroll system—or making it easy to link the two—is a fundamental requirement for a good payroll system.

The inclusion of this feature in the payroll system eliminates the need to manually enter clock-in and clock-out times into the system to initiate accounting processes, which improves the system’s operational efficiency due to the accuracy of the data it relies on, as well as the accuracy of each employee’s salary calculations—ensuring no overpayments or underpayments.

Compliance with Labor Laws

When managing financial matters, compliance with regulations and laws is essential to protect the company from legal liability and avoid time-consuming procedural issues. For this reason, the payroll system must ensure adherence to all labor laws and align with the latest changes. This way, the company will not be forced to adjust or justify accounting entries for approval and recording, and it will be protected from potential fines arising from non-compliance with labor laws, thereby navigating the legal compliance process smoothly and in the shortest possible time.

Integration with Other Systems

A payroll system needs to integrate with other workplace systems. For example, it integrates with the human resources management system, the shift schedule, and the employee database, as well as accounting and social insurance software—as Jisr does, bringing all these systems together in one place to streamline task completion.

Customization

Customization is a key feature that improves payroll processing efficiency, as every company has unique needs and specific check formats and templates. Therefore, payroll systems need to be customized to align with these specific requirements. 

The payroll system should let companies add fields they need to customize payroll details—such as linking salaries to attendance and absence records, including overtime and leave hours, and adding or removing items related to bonuses and deductions based on the company’s compensation structure.

Why is Jisr Payroll the best in Saudi Arabia?

If you’re looking for the right payroll system for your company, Jisr is the ideal HR system for your business, offering all the essential features you need. It includes integration capabilities, attendance tracking, and accounting compatibility, plus customization, labor-regulation compliance, and direct deposit, all while meeting the highest standards of security, accuracy, and ease of use.

Automation of Payroll Tasks 

Automation is one of the most important features, helping reduce errors and increase productivity and efficiency. Therefore, the more automated the payroll process, the fewer errors there will be and the less time you will spend correcting entries and adjustments. For example, without automation, it is difficult to manually enter and process attendance records without errors in data entry, adjustments, or other areas.

With Jisr, you can automate all processes related to payroll inputs and factors, including, for example: 

• Define a fixed approval workflow for the steps involved in payroll preparation
• Updates with notes on value-added items for payroll processing (all additions and deductions)
• A timeline of all operations that may affect payroll processing 
• Attach supporting documents for additions made, such as promotion letters, salary increases, and time and attendance records
• Define any requests that affect payroll processing and subsequently incorporate them into recurring procedures
• The only system that deducts social insurance contributions directly from the salary of eligible employees
• Alerts regarding the employee’s status with respect to enrollment in social insurance and on the Jisr system 

Integration with attendance records 

For most companies, attendance and time-out data account for 50% of the monthly payroll processes. This makes them the most critical input for payroll processing; the more accurate the attendance and time-out records are—and the more closely they are linked to precise, automated calculations—the more efficient and faster the payroll process becomes. Jisr, with its comprehensive coverage of all attendance and time-off elements that impact payroll, transforms the payroll preparation process entirely:

• Scheduling shifts
• Advanced options for configuring fingerprint data, linking it to attendance and time-out schedules, tracking it, and calculating it
• Processing requests that affect attendance, clock-in/out records, and payroll 

Integration with Social Insurance 

Jisr is proud to be the only human resources system in Saudi Arabia that compares and matches employee data with the General Organization for Social Insurance system. This integration helps you:

• Update social security details in the employee’s file 
• Compare and reconcile social insurance and Jisr participant data when preparing payroll 
• Classifying employees enrolled in social insurance if the organization has more than one subscription 
• Alerts regarding discrepancies between employees’ salaries reported to social insurance and those recorded in the system

Integrating Payroll with Muddad 

Muddad is a digital platform that provides a comprehensive payroll management solution for small and medium-sized businesses. It stores and processes payroll data and offers numerous services that assist both employers and employees. It is the official operator of the Wage Protection System under the Ministry of Human Resources and Social Development. 

Maddad is one of the most important payroll management systems, helping companies comply with their payroll payment obligations. Jisr Payroll enables you to directly integrate your company’s payroll system with Maddad, thereby:

• You won’t need to upload the bank file 
• You can pay salaries in installments and automatically update the Wage Protection file
• You can track the payment status for each employee
• You can review alerts related to wage protection 

Helping ensure compliance with the Wage Protection System 

One feature that sets Jisr’s payroll system apart is the ability to receive alerts related to the Wage Protection System—a government initiative for wage protection and contract documentation that operates through the Madad platform and helps safeguard contracting parties' rights and create a safe work environment for employees. 

Empower employees through payroll management

Jisr was designed around a core value: increasing employee engagement and involvement in HR management tasks, fostering high workplace transparency. Through Jisr, employees can: 

• View their personal information in full detail (data, leave, performance evaluations, and time and attendance records)
• View salary data and financial details related to allowances, bonuses, percentages, and more
• Submit requests that affect payroll processing, such as advance payments, overtime, financial claims, business trip reimbursements, and more
• Track the progress of submitted requests and the approval workflow for each request

Customize payments and deductions that affect payroll processing 

Routine factors affecting payroll processing include payments that are reviewed prior to disbursement and fall outside the salary category, such as overtime allowances, advance payments, expense claims, and business trip reimbursements. Deductions include social insurance contributions, advance payment installments, and the impact of attendance and time-off records—such as absences and tardiness—and similar factors. However, with Jisr, you can customize payments and deductions and define new types so they are applied every time payroll is processed, ensuring these new payment and deduction types align with your internal company policies.

Compliance with the Saudi Labor System 

One of the most important features supported by Jisr is its compliance with the Saudi Labor Law and its alignment with the regulations and updates periodically issued by the Ministry of Labor. You don’t need to keep track of any updates to the labor system related to payroll processing, as Jisr will automatically alert you to and update you on all new regulations and rules issued by the Labor Office, and help you implement them.

Automatic Integration with All Factors Affecting Payroll Processing

Jisr links all factors that can affect payroll processing, such as time-in and time-out schedules, leave, overtime, various deductions from advances, and more. All these elements are handled in a fully automated manner.

Pre-defined accounting entries 

Your accounting entries are fully automated and ready to use, helping you avoid data entry errors and saving you time and effort spent on data entry and review. With Jisr, you can process payroll and post the necessary accounting entries directly through a ready-to-use payroll system.

Integration with the Most Popular and Widely Used Accounting Software

Jisr supports the most widely used accounting software, thereby connecting payroll processing with leading accounting programs such as Xero, QuickBooks, NetSuite, and others.

Integration with Other Systems

Jisr integrates with various operational and administrative systems many companies use, such as Oracle, Microsoft, and others. 

Defining and Entering Deductions and Add-Ons, and Customizing Payroll Inputs

Jisr lets you define the allowances and deductions that appear during the payroll adjustment and preparation phase. This feature lets you manually add or deduct amounts from an employee’s pay, typically for exceptional transactions such as bonuses, commissions, and deductions for cash shortages, advances, or prepaid salaries.

How does the payroll system contribute to improving employee performance?

Payroll processing fundamentally affects every employee. Accurate payroll processing, completed on time each month, is one of the most important factors in increasing employee satisfaction and boosting performance and morale.

Accuracy in Payroll Calculations 

Building employee trust in the company may depend heavily on the accuracy with which their rights and entitlements are handled. The more employees trust that the company is diligent about the accuracy of its calculations and compensates them for all their entitlements, the higher their satisfaction and trust in the company will be. 

With Jisr’s payroll system, you can reduce errors and increase payroll accuracy by 90%. Customers who have used Jisr attest that payroll calculation accuracy has increased by more than 90% thanks to the system's automated data, such as attendance and time-out records, overtime calculations, and other fully automated, diverse records. Read about the experience of Bursa Furniture Company.

Monthly Payroll

Payroll is why employees work for your company; therefore, it ranks first in importance to them and fundamentally affects their lives and work. Consequently, it significantly affects their productivity and the quality of their work. That is why it is crucial to ensure accurate timing of monthly payroll deposits.

Adding Bonuses and Financial Incentives

With ease and full automation, the HR manager can add and define any employee benefits through financial additions to the payroll system. Defining bonuses and financial incentives within the payroll system helps motivate employees and increase their productivity. 

Submitting Payroll-Related Requests with Ease and Convenience

Employees can submit payroll-related requests through the Jisr app without spending significant time or effort preparing, submitting, or following up. Through Jisr, employees can submit any of the following requests that affect payroll: 

• Advance Requests 
• Overtime Requests 
• Financial Claims 
• Business Trip Reimbursements

Additionally, through the employer-established payroll approval workflow, employees can track payroll-related requests by seeing who is responsible for approving them and which stage they’ve reached in the workflow. This feature helps employees save time and easily track their requests through self-service via the Jisr app.

Self-Service via Jisr App 

Jisr app provides employees whose companies use Jisr with various services that enable them to perform a number of tasks on their own without having to seek answers or assistance from Human Resources. These include, for example: 

• Clocking in and out via the app 
• Viewing Leave Balances 
• Viewing an employee’s recorded attendance and departure schedules 
• Submitting various requests related to payroll and general matters, including more than 12 types automatically recognized by the system