Contact Us Everything You Need To Know About Payroll Management

Everything you need to know about payroll management

What is supply chain management (SCM)?

Good Hr and payroll management solutions are the backbone of every successful company today. To run a business effectively - one needs to have a thorough understanding of these particular functions, especially payroll processing. So, read ahead as we tell you all about payroll and lay down all the basics of payroll management

  1. Planning

    This aspect requires businesses to plan, manage and account for all resources that may be required to meet the customer demand for a company's products or services. When the supply chain is carefully thought out and well-established - a company then determines the metrics that are used to measure whether the supply chain incurs sufficient profits, provides value to customers, meets company goals, and is entirely efficient.

  2. What is payroll management?

    In simple terms, payroll is a list of employees who get a salary each month from their employer. As a business function, payroll management is a huge process! From calculating each employee’s gross salary to releasing payslips and depositing various dues as per government laws - there is a lot of work that an accounting department or payroll officer of a business does on a regular basis.

  3. Why is effective payroll management crucial for a business?

    Besides the amount of work involved, businesses also need to be highly accurate while processing payroll. This is because even tiny errors while managing payroll can amount to huge losses and penalties for a company! Every business is accountable as it needs to be compliant with current payment laws as well as issue salaries on time to its employees. A business that is proficient in processing payroll each month will always have happy and satisfied employees.

  4. What are the stages of payroll processing?

    Payroll processing can be divided into three main stages - pre-payroll, actual payroll and post payroll activities.


  • Defining a standard payroll policy

  • Input gathering from company departments

  • Input validations


  • Calculation of net salary

Post Payroll

  • Statutory compliance

  • Payroll accounting

  • Actual payout

  • Sharing reports


The first step for a company is to define its standard payroll policy. While doing this, various factors are taken into account such as its attendance policy, leave and benefits policy, and more. Once the payroll policy is defined, it is then approved by the company management.

Another major pre-payroll step is to gather employee input data from major departments of the company such as HR, Finance etc. This involves all important information such as salary revisions, attendance, deductions, etc.

Once these inputs are received, companies then check for the validity of this data. These validations involve doing a headcount of active employees, using the right formats, checking if the data adheres with company policies, ensuring that there are no gaps in the financial transaction information etc.

Actual Payroll

The validated input data is then fed into the payroll processing system. At this stage, the net pay for every employee is calculated and verified thoroughly for accuracy. The equation for this is:

Net pay = gross salary - gross deduction


Activities at this stage of the process involve various making statutory deductions, maintaining records, transferring the payouts to employees, and sharing payroll reports.

At this time of payroll processing, statutory deductions are made such as TDS (Tax deducted at source) and EPF (employee provident fund). These are then remitted to the respective government agencies and then returns are filed as required.

After this, the actual payout of salaries is done to all the employee bank accounts and a salary bank advice statement is sent to their bank branches. Salary payslips are also published, which are sent to the employees.

The company then updates the paid salaries in the accounting books. This is also where every piece of data needs to be accurately checked while being fed into the company's accounting system.

Finally, when the payroll is completed for the particular month, various reports on employee costing are shared as per the requests made by the company management.

At IDC Technologies, we’ve given you complete information on how payroll is processed by companies today. However, this process when done in-house by businesses takes up a large chunk of their time, energy, and resources. This is why many companies now tend to outsource their payroll management to agencies such as ours in order to focus their efforts towards business growth.

For further information, read our article on how payroll outsourcing can be beneficial for your company.. (connect with payroll outsourcing article once published)


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