Running Payroll Late In The UAE: What To Expect?

March 14, 2023

Maintaining any business in the current economic climate is no simple undertaking – spending is down, people are concerned about the future and global markets are experiencing fluctuations caused by multiple factors. Small firms should start considering where they might reduce costs in order to keep their cash flow positive. Payroll Software in Dubai can help small business take control of their cash flow and improve their payroll systems.

Business owners will sometimes choose to postpone payroll in an effort to "better" use their existing finances in the short term. Nevertheless, this is both against the law and a mistake that could have serious repercussions. Payroll is one area that should never be compromised.

The consequences of paying employees late might are more severe than you might think. There are multiple repercussions ranging from lowering employee morale to violating the Fair Labor Standards Act (FLSA). Maintaining a steady cash flow is crucial to ensuring that payroll can be done on schedule.

What Happens If You Run Payroll Late?

Running payroll late, due to a reduction in cash flow, may seem like an easy concession but doing so may have harmful consequences for your business. A company’s workforce is its greatest asset, so maintaining high morale within your workforce is paramount to success within a business. Paying employees on time ensures a content and effective workforce, while late payment of salaries will result in employees growing frustrated and disillusioned. A reduction in employee morale has numerous different effects, including decreased productivity, reduced attention to detail and a general disinterest in their work.

There is no denying that delays with payroll can lead to conflict within a company. The symbiotic operation of an efficient business is impacted as employee output declines, along with any sense of pride that employees might usually have in their work. Pride might be considered an intangible emotion, but it does have a significant impact on an employee’s productivity. Employees that receive their paychecks on time will be happy, feel valued and continue to work at their best capacity.

The Late Payroll Tax Penalty

In addition to negatively impacting employee morale, delaying Payroll can have other equally harmful effects. Payroll taxes are an additional element to the payroll process and the IRS does not tolerate missed or delayed payments. A late or missed payment will result in a tax penalty, and businesses can expect to be charged interest on these penalties. On average the amount of interest charges ranges from 3% to 6% of the total debt. An effective payroll software in Dubai can help companies avoid the risk of missing payments and facing payroll taxes.

Manage your Cash Flow to Avoid Missed Payrolls

Cash flow management is an essential element of any high-performing business. The implementation of an effective payroll software can revolutionise a company’s payroll procedures and help prevent missed or delayed payments. In addition to using the correct payroll software, ensuring a smooth working relationship with your accounting team is one of the first steps when it comes to managing your cash flow. Discuss future cash flow projections with them, before building your company’s operations accordingly. Discuss cost-cutting measures and managing credit card debt. Most importantly, ensure effective collaboration with your finance team, in order to monitor all the processes associated with the company’s payroll.