By Mary DeNatale, District Sales Manager, The Payroll Factory®

Published: 02 MAY 06

You might find this hard to believe but many small business owners wait to the last minute to think about setting up payroll processing procedures. The primary reason for this procrastination is the owners are so busy getting their business up and running and wearing many different hats in the organization that when it is time to hire employees their primary focus is to pay the employees. Unfortunately, not all business owners take the time to see how payroll cycles can impact cash flow, time management, employee attendance and company growth.

There are a few things that you need to remember when developing your internal payroll program. First you need to keep in mind how your company’s cash flow works. If Friday’s are the leanest days for cash flow don’t make your pay day Friday just because other companies do and your new employees think that it is the day they should be paid.

Do your employees live paycheck to paycheck? If the answer is yes, is it because they like to spend their check as soon as they receive it? If so, if you pay them on a Monday is employee attendance doing to be low on Tuesday? These questions bring me to the second item you should keep in mind in developing your payroll program. How employee behavior can affect company growth.

Once you have determined what day of the week should be pay day you need to think about the frequency of pay and whether or not to hold a week. By holding a week I mean if you were paying your employees on a weekly basis and your pay cycle is Sunday to Saturday you would have pay day be the following Friday. This allows you time to calculate the hours and produce the paychecks for your employees or if you are using a payroll service it provides you time to calculate and report the hours to the service and time to have the checks delivered. This delay in pay also allows a terminated employee time to return company tools, uniforms or other company owned equipment before receiving his or her last check.

To avoid disgruntled employees, on pay day have a Payroll Specialist help you to develop your payroll program from the beginning. Find a payroll provider that understands your needs and will help you develop a payroll program that will make payroll an effortless part of your company. Avoid payroll companies that place their primary focus on conforming you to their schedule and do not want to take the time to listen to your needs. These companies’ processors are generally data entry experts not payroll specialists and will not give you the level of service you deserve.