The Culprit Of Expensive Payroll Mistakes Revealed

PwC research uncovers why top corporations are losing up to $45 million a year from payroll mistakes.

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When money managers are tasked with saving their businesses money, payroll may not be the first place they look – but maybe it should be.

Payroll mishaps are reportedly costing top companies around the globe between $15 million and $45 million a year, according to a new PwC study. The culprit? The globalization of today’s workforce, researchers said, leading to challenges in tracking employee activity as well as adhering to tax guidelines across borders.

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Researchers also anticipate that the problem will exacerbate with time; according to PwC, 89 percent of survey respondents said they are planning to increase their global workforce and turn to short-term contracts more than traditional, long-term hires.

“Organizations are struggling with the increasing complexity and global nature of payroll,” said Chris Watt, the business leader of PwC payroll service, Payright, according to reports Wednesday (Nov. 18). “As they increasingly look beyond domestic boundaries, the complexity of their payroll operations grows, too.”

He added that corporations need to adopt payroll solutions that are scalable and can more adequately support a corporation’s international expansion.

Reports did not specify the exact cause of payroll-related financial losses cited in the research.

The analysis could spell even more trouble for small- and medium-sized enterprises, which were found in a separate study to often tackle payroll operations solo, without the use of a third-party service provider. That research, conducted by Paychex, found that the majority of U.S. SMEs handle payroll themselves instead of outsourcing the function.