Get to know how to decrease the 8% error level during payroll preparation.
1. Human Error
1. Human Error

Errors in payroll calculation are inevitable with traditional timecards. The American Payroll
Association data shows an error rate of between 1 and 8% of total payroll in companies that use traditional timecards.

There are lots of opportunities for inaccurate data entry that may occur along the information chain. However, most payroll errors occur when typing in timecard information. Duplicate or excess data entry is another problem. Frequently the same information is keyed in at least twice when totals are summed up at the end of a pay period. An incorrect symbol or figure entered on a keyboard can occur costly payroll errors and corrections.

Errors can also occur when entering employee data such as the requisite name, address, vital statistics, and hourly rate, plus job history, off times, and unique qualifications. Problems arise when information such as classifications, wage rates, or pay codes are missing or incomplete.

Employees frequently forget to fill in their cards daily and then go by the best of their recollection at the end of the pay period, or turn in pay cards with missing information. Payroll is then obliged to track down missing information and verify questionable entries to ensure that employee hours are charged to the proper accounts and that pay checks are accurate.

The following table illustrates the annual cost of a 1% error factor:

  Number of Employees

Average Hourly Rate

 25

50 

100 

 

 $2,730

 $5,460

 $10,920

 $ 5.25

 $3,540

 $7,280

 $14,560

 $ 7

 $5,200

$10,400  

 $20,800

 $10