What is payroll reconciliation and how to do it effectively? Definitive Guide 2023

What is payroll reconciliation and how to do it effectively? Definitive Guide 2023

Payroll reconciliations are increasingly necessary in companies, whether they have few or many employees and collaborators. Find out in this Conciliac blog post why and how to do it effectively today.

Table of Contents:

On several occasions we have addressed in this blog how companies are performing accounting reconciliations today, in times where data and systems abound that make this task simpler and offer greater opportunities at the same time.

Within the world of accounting reconciliations, there are some that have an impact on accounting but that refer specifically to the segment focused on the employees.

We are referring to payroll reconciliations, a topic that we will discuss in depth in this blog so that you do not neglect one of the relevant focuses within the finances of a company.

What is payroll reconciliation?

Payroll reconciliation is a process in the field of human resources management and accounting that consists of comparing and verifying the information stored in payroll records with the corresponding information in a company’s financial statements.

The main objective of payroll reconciliation is to ensure that there are no discrepancies or errors between the payroll data and the company’s accounting records.

During the payroll reconciliation process, several items are reviewed and compared. Some of them are:

  • Salaries.
  • Salaries paid.
  • Deductions made for taxes and benefits.
  • Overtime payments.
  • Social security contributions and payments to pension plans.
  • Vacation accruals.
  • Other accrued benefits.

4 reasons why you need to automate payroll reconciliations

As in any reconciliation, whether of data or accounting, what is sought is to counterbalance information from one end to the other in order to identify possible errors, omissions or discrepancies in the records.

In the case of payroll reconciliations, when this comparison of data is performed on a regular basis, the accuracy and reliability of a company’s financial information is guaranteed, while ensuring that employees are compensated correctly.

However, for reconciliation of this type to be truly effective, it is necessary to eliminate errors external to the data, those that, for example, may be made unintentionally during the loading or processing of the information.

The effective way to do this is through a platform such as Conciliac EDM, which automates the entire process, from the beginning to the end, and can also manage automated reports during certain periods and counteract, including these data.

Now, let’s take a look at these four reasons to automate payroll reconciliation:

  1. Eliminates errors:

As mentioned here and in previous posts on this blog, manual reconciliations are prone to errors that many companies sometimes accept with resignation.

But if there is a way to avoid these errors, wouldn’t you also be eliminating a money drain? Automating payroll reconciliation processes eliminates errors caused by incorrect data entry, omissions or misinterpretations.

Automated systems can verify and compare data accurately and consistently, minimizing the possibility of errors and ensuring accurate results.

  1. The time and resources factor:

Payroll reconciliation is a laborious process that must be performed every month and takes a certain amount of time and resources to perform.

Many companies do not have personnel or technology dedicated only to these actions, so someone from the finance or human resources area must neglect their daily actions during the days in which the reconciliation is performed.

This generates deconcentration and turns this necessary process into another source of risk for a company’s finances, something that can be avoided by automating the procedure.

Automation can perform accurate and fast calculations, verify data in multiple systems and generate detailed reconciliation reports in a short time, reducing staff workload and allowing those resources to be used on other higher-value tasks.

  1. Regulatory and legal compliance:

Payroll reconciliation involves ensuring that wages, benefits and deductions comply with applicable labor laws and regulations.

Automating this process helps with regulatory compliance by automatically verifying and tracking legal requirements.

But that’s not all. Automated systems can also generate reports and documentation needed for audits and legal reviews, facilitating compliance with legal obligations and avoiding potential penalties.

  1. More precision and transparency:

By automating payroll reconciliation, greater accuracy in calculations and records is achieved. Automated systems can access up-to-date and accurate data from different sources, which again reduces the possibility of errors in reconciliation.

Additionally, it provides greater transparency by allowing detailed tracking of payroll-related transactions and records. This makes it easier to identify discrepancies, resolve problems and make decisions based on reliable data.

What do you have to do to automate payroll reconciliation?

To automate payroll reconciliation, all you need is enterprise data management software, i.e. software that contains multiple solutions in one place.

This is the ideal scenario and the one you have at your disposal now if you would like to, since it is also likely that in your eagerness to start on the road to automation you hire different platforms to solve certain routine tasks.

Let us warn you that this habit will end up generating more confusion than solutions. On the other hand, when we automate all the processes in one place, be it data or banking reconciliations, but which in all cases will have an impact on the finances of your business, the one who wins is precisely your company.

Conciliac EDM is the first and only platform that integrates all the automation tools that companies need today to perform payroll, banking or data reconciliations. In addition, it allows to robotize these procedures allowing you to scale in opportunities.

We have already given you the reasons why you should automate your payroll reconciliations. Do you want to try it out and see what the positive impact on your finances will be? Ask us for a demo, we are at your disposal to advise you.