Though most business in the U.S. still process paychecks internally, this is not always the as cost-effective as it appears.
At minimum, processing payroll internally can cost valuable hours of employee time every pay period plus expensive accounting software, and training.
Did you know that just 15 employees receiving pay for merely 4 minutes of “wasted” time per day (untracked breaks, extended lunches, over-approximated punch times, etc.) will total 1380 minutes (23 hours) of additional pay per month.
If you average pay rate is $10.00 per hour, then you pay an extra $230.00 each month in labor costs.
The American Payroll Association estimates that the rate of human error in time card preparation is between 1% and 8%.
Therefore, a conservative 2% human error rate on a $12,000 payroll would equal $240.00 in erroneous wages paid per pay period. Moreover, the cost is re-issue correct payroll amounts (if the error is detected and reported) further increase your cost of human error.
The average payroll clerk spends 7 minutes per time card preparing, computing, and verifying each time card.
Preparing 100 time cards will take an estimated 11.67 hours to complete. Therefore, at an average clerical wage of $15.00 per time care preparation would cost $175.05 per pay period.
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