Understanding the true cost of payroll is essential to keeping your wages under control. Poorly calculated pay rates, unseen payroll “on-costs” and inefficient payroll processes all contribute to an overall payroll overspend (impacting your bottom line).
Payroll should be measured as an end-to-end function, from the time employees start work to the time they receive payslips and yearly payment summaries. Coming up with a figure is not always easy, especially for businesses with limited resources.
Your real payroll cost is based on many “hard-to-measure” factors such as; time taken in preparation, time taken reporting, time taken EOFY processing and the cost of the payroll team itself. Understanding the perfect blend of full time, part time and casual employees is also essential to minimising cost.
A simple place to start is in the calculation of your payroll “on-cost percentage”. Based on more easily measured factors such as; annual leave, sick leave, long service, superannuation and payroll tax, this figure can be added to your gross wages or rostered wages for a more accurate cost calculation.
We’ve prepared a simple payroll “on-cost calculator”. In just four simple steps you can calculate a more accurate wages figure or model the impact of differing ratios of full time, part time and casual staffing arrangements.