How Long Does It Take For Payroll To Process?

Are you tired of the payroll processing mystery? Wondering how long it actually takes and what factors can speed up or slow down the process? Payroll processing can be a bit of a puzzle, and unfortunately, there’s no one-size-fits-all answer to how long it takes. It can vary from a few days to a few weeks, depending on a bunch of different factors.

Payroll processing can be a breeze or a bit of a slog, depending on things like the size of the company, the country or state it’s in, and the banking system they use. As much as we’d love to give you a concrete answer, the truth is that it’s just not that simple. The truth is that there are several steps involved, from collecting timesheets to transferring money to your bank account. 

So, how long does it take to process payroll, and what factors affect the speed of the process? In this article, we delve into the complexities of payroll processing, from collecting timesheets to transferring funds. We explore the impact of software, the efficiency of the payroll office, and even the role of banks in the equation.

What Is Payroll Processing?

Payroll processing means figuring out how much money to pay employees after taking out taxes and other deductions. It’s important to have a good payroll system to make sure your employees get paid on time and correctly. It will help you keep your reputation with your employees.

Before employees can get paid, the company needs to go through a few steps. First, they need to collect information about how much you worked. This is usually done by filling out a timesheet, which is like a record of all the hours you worked.

Once they have that information, the company needs to figure out how much they owe you. This is where things get a bit tricky because they need to take into account things like taxes and benefits. So, the people in charge of payroll have to do some math to make sure they’re paying you the right amount. This system will vary depending on the jurisdiction and country.

Once they’ve figured that out, they need to actually transfer the money to your bank account. This is usually done through a process called direct deposit, where the money goes straight from the company’s bank account to yours. But, depending on how long that process takes, it might be a few days before the money actually shows up in your account. Each bank around the world will have a different processing time.

When someone asks how long it takes to process payroll, what they’re really asking is how long it takes to complete all of these steps. The time it takes can vary depending on how many employees there are and how complicated the payroll calculations are, but the biggest factor is usually how quickly the people in charge of payroll can do all the necessary paperwork and calculations. 

What Affects Payroll Processing Speed?

There are three factors that can affect how quickly that money hits your account. The first is timesheets. Yep, those pesky bits of paper or online forms that you need to fill out, detailing how many hours you’ve worked. The accuracy and timeliness of these bad boys can impact the speed of your payroll.

Next up, the payroll processing office. This is where the real magic happens, where those numbers get crunched, and you get paid. But, if your payroll department is understaffed or overworked, it could cause delays. Lastly, let’s not forget about the bank. While direct deposit is a faster way to get paid, each bank has its own processing time. So, depending on your bank, it could take a couple of days for that sweet cash to land in your account.

1. Timesheets

While all employees are excited to get paid, sometimes the work is not done on their side. If they are an hourly or contracted employee, they will have to submit timesheets. In large organisations with a large number of employees, it is possible that some have not done. The payroll office cannot begin processing one’s pay until it has been handed in.

2. Payroll Office

It is quite an undertaking for a payroll office to process the entire payroll for a company. When it comes to paying employees, there are a lot of steps involved in making sure they get the right amount of money. First, you have to figure out their gross wages – that’s the total amount they earned before any taxes or other deductions are taken out. If your employee is hourly, you’ll need to multiply the number of hours they worked by their hourly wage. For salaried employees, you can divide their annual salary by the number of pay periods in the year.

Followed by taxes and deductions. You’ll need to calculate how much money needs to be withheld for taxes. These factors will change from nation to nation, state to state, and jurisdiction to jurisdiction.

After all of that, you’re left with the employee’s net pay, which is the amount they’ll actually take home. It’s a lot of work to make sure everything adds up correctly.

Now, here’s the thing – depending on how you handle payroll, it could take you just a few minutes or several days to complete. If you use payroll software, it’ll save you a lot of time and headaches. But if an organisation does it all manually, one will need to set aside a lot more time to make sure everything is accurate.

3. Banking

Banking is not an instant system. Depending on how an employee gets paid, the bank may hold their funds. Banks will also not do any work outside of Monday to Friday, 9 to 5, hence the term ‘Bank Hours.’ If a payment falls on a holiday, then it will be delayed even further. Additionally, banks can get busy, which slows down processing times even more.

Banks will often hold funds when it is a paper cheque while the money is verified. This is a benefit of direct deposit. Each step during direct deposit is verified, and therefore, it is a quicker and safer process for everyone involved.

How Long Does It Take For Payroll To Process?

Once payroll is processed and sent to the employee, then we can approximate processing times on the bank’s side. Direct deposit can take 1 to 3 days, depending on holidays and weekends. Paper cheques take 2 to 5 days due to taking more time to clear. Digital wallets can take 1 to 2 days — quite a quick process. If this is being done for international employees via wire transfer, then it could take weeks to months.

Direct deposit is like a magician’s hat – quick, convenient, and impressive! With direct deposit, the paycheck appears in the employee’s bank account like magic. It saves time, reduces errors, and is more secure than paper cheques. The process is easy, too — just collect employee banking information, enter it into your payroll system, and voila! Your employees get paid.

The time it takes for direct deposit to arrive depends on the bank’s processing times, which can be affected by weekends and holidays. If your employees live in different countries, it can take even longer for the payment to reach them.

Paper cheques are like old-fashioned letters – you get a physical piece of paper that you can hold in your hand. They can be useful if your employees don’t have a bank account, and they also provide a paper trail. But there are downsides too. Handwriting cheques, mailing them, and waiting for them to clear can take a while. Plus, there’s always the risk of a cheque getting lost in the mail.

Can I Process Payroll Faster?

There are only three factors that affects payroll speed: timesheets, the payroll office, and bank processing. Out of these three, only one can be potentially sped up and that’s the internal payroll processing inside of a company. Simply, a bank will not increase its processing speed. It just will not happen.

There is no simple answer as to if one can increase their payroll processing speed. Once the process is standardised, knowing all deductions and taxes, that’s pretty well the rate it will take each time. 

Some websites propose upgrading software, but again, once the information is input, with jurisdiction taxes and such, the payroll processing speed rate is the rate. Many websites will claim that software will help but a company still needs to be organised ahead of time. Software cannot fix all the issues you’ll face during the payroll process. Better software will not help employees get their timesheets in on time. Plus, switching from one piece of software to another can take a large leap of time. Instead, to make pay processing more efficient, it may be wise to speak with experts.

Work With Payroll Experts

The length of time it takes to process payroll can vary significantly depending on several factors, such as the size of the company, the jurisdiction, and the banking system used. Just like making a cake, some payroll processes are quick and easy, while others require more time and effort. 

Timely and accurate timesheets, a well-staffed payroll office, and the efficiency of the bank’s processing system all contribute to the speed of the process. Understanding these factors can help individuals and organisations better manage their payroll processing and ensure that their employees are paid on time and correctly.

The simplest and most efficient answer is to work with a qualified team of experts. Payroll processing with WhiteFin can come to the rescue; simplifying the process, minimising errors, and automating the most complex aspects of multinational payroll processing. WhiteFin has decades of combined experience as a leader in payroll processing.

WhiteFin has decades of combined experience in working with payroll, whether it be for local or international companies. If you want the best team in your corner to help make payroll more efficient, then WhiteFin is the team for you.