Timing is Everything: All About Payroll Cycles
If you’re familiar with payroll, you’ll know all about the statutory deductions and compliance regulations around it. However, an equally important factor is the payroll cycle.
In this article, we will explore the different types of payroll cycles, their advantages and disadvantages, and how to choose the right one for your business.
What Are Payroll Cycles?
You may have come across this term, but what does it actually mean? The payroll cycle refers to the frequency with which an employer pays their employees. This can range from weekly to monthly, or even annually, depending on the employer's preferences and the nature of the work.
The payroll cycle not only includes processing salary, but also processing any other funds due to the employee such as overtime, allowances, and expense claims. Ad-hoc payments like bonuses are not normally included in the payroll cycle.
The payroll cycle has significant implications for both employers and employees. For employees, the cycle dictates when they receive their pay, which can have a significant impact on their personal finances. For employers, the cycle determines when they must process and pay their employees, which can have a significant impact on their cash flow.
Types of Payroll Cycles
Weekly Payroll Cycle
The weekly payroll cycle provides employees with the most regularity in receiving their paychecks. It typically runs from Monday to Sunday, with employees receiving their pay on the following Friday. This cycle is mainly used for hourly or part-time workers who earn a set wage each week.
With a weekly payroll cycle, employees can expect to receive a paycheck at the same time every week, which can help them budget and manage their finances. It also allows employers to quickly adjust employee pay if they work overtime or take time off.
On the other hand, weekly payroll requires more frequent processing of employee pay, which can take a lot of time and resources. It also can have a significant impact on cash flow as payments are made more frequently.
Bi-Weekly Payroll Cycle
The bi-weekly payroll cycle occurs every two weeks, typically on a specific day, such as every other Friday. It isn’t used as much as the weekly payroll cycle, but some employers prefer it as it doesn’t require as much processing.
Like the weekly payroll cycle, bi-weekly payroll provides employees with regular and predictable paychecks. However, it also requires frequent processing time, as well as potentially impacting cash flow like weekly cycles.
Monthly Payroll Cycle
This is the most frequent payroll cycle you would encounter when dealing with salaried employees. The monthly payroll cycle usually occurs on the last day of the month, but some companies start earlier on the 25th or 26th day of the month. Most organizations structure their employee cash flow around monthly payroll cycles.
For employees, this is the most predictable payment schedule. The wider economy is also structured around monthly payroll – bills due every month, monthly sales etc. However, it may also result in the oft-repeated lament about end-of-month budgeting for employees.
Choosing the Right Payroll Cycle
When choosing a payroll cycle, businesses need to consider their cash flow and the payment preferences of their employees. It is important to select a payroll cycle that meets the needs of both the employer and the employee. Here are some factors to consider when choosing a payroll cycle:
- Cash Flow: The payment schedule can impact the cash flow of the business. Employers need to choose a payroll cycle that aligns with their cash flow.
- Employee Needs: Employers need to consider the payment preferences of their employees. Employees need a payment schedule that allows them to budget and plan their expenses.
- Processing Time: Employers need to consider the time and resources required to process payment. A payment cycle that requires less processing time saves resources.
Multiple Payroll Cycles
Multiple payroll cycles are useful for businesses. Some use cases include:
- Different groups of employees paid at different times of the month, for example sales personnel getting commission payments sooner than salaries of other employees.
- Businesses that have a mix of full-time employees paid monthly and part-time employees paid weekly.
- The ability to pay expense claims separately from monthly salaries.
However, most businesses don’t use multiple payroll cycles despite its usefulness. This is because dealing with multiple payroll cycles is complex and requires more processing resources. Overlapping pay periods mean that the potential for errors is much higher.
Make Even Multiple Payroll Cycles a Breeze with BrioHR
Processing payroll can be repetitive and error-prone, but it doesn’t have to be with BrioHR. Whether you pay your employees weekly, bi-weekly, monthly or otherwise, BrioHR is able to calculate everything correctly – including statutory deductions, taxes, expense claims and more.
Furthermore, BrioHR can now also run multiple payroll cycles. Let’s say you have some employees that you pay weekly, while others are paid monthly, you can now manage their payroll in one, integrated platform.
With a secure, scalable, user-friendly platform, BrioHR covers the entire employee journey from recruitment to onboarding, payroll and claims, to performance and analytics, and more.
This enables business owners and HR teams to truly focus on what matters most – people.
Visit briohr.com and get a free demo now.
If you’re familiar with payroll, you’ll know all about the statutory deductions and compliance regulations around it. However, an equally important factor is the payroll cycle.
In this article, we will explore the different types of payroll cycles, their advantages and disadvantages, and how to choose the right one for your business.
What Are Payroll Cycles?
You may have come across this term, but what does it actually mean? The payroll cycle refers to the frequency with which an employer pays their employees. This can range from weekly to monthly, or even annually, depending on the employer’s preferences and the nature of the work.
The payroll cycle not only includes processing salary, but also processing any other funds due to the employee such as overtime, allowances, and expense claims. Ad-hoc payments like bonuses are not normally included in the payroll cycle.
The payroll cycle has significant implications for both employers and employees. For employees, the cycle dictates when they receive their pay, which can have a significant impact on their personal finances. For employers, the cycle determines when they must process and pay their employees, which can have a significant impact on their cash flow.
Types of Payroll Cycles
Weekly Payroll Cycle
The weekly payroll cycle provides employees with the most regularity in receiving their paychecks. It typically runs from Monday to Sunday, with employees receiving their pay on the following Friday. This cycle is mainly used for hourly or part-time workers who earn a set wage each week.
With a weekly payroll cycle, employees can expect to receive a paycheck at the same time every week, which can help them budget and manage their finances. It also allows employers to quickly adjust employee pay if they work overtime or take time off.
On the other hand, weekly payroll requires more frequent processing of employee pay, which can take a lot of time and resources. It also can have a significant impact on cash flow as payments are made more frequently.
Bi-Weekly Payroll Cycle
The bi-weekly payroll cycle occurs every two weeks, typically on a specific day, such as every other Friday. It isn’t used as much as the weekly payroll cycle, but some employers prefer it as it doesn’t require as much processing.
Like the weekly payroll cycle, bi-weekly payroll provides employees with regular and predictable paychecks. However, it also requires frequent processing time, as well as potentially impacting cash flow like weekly cycles.
Monthly Payroll Cycle
This is the most frequent payroll cycle you would encounter when dealing with salaried employees. The monthly payroll cycle usually occurs on the last day of the month, but some companies start earlier on the 25th or 26th day of the month. Most organizations structure their employee cash flow around monthly payroll cycles.
For employees, this is the most predictable payment schedule. The wider economy is also structured around monthly payroll – bills due every month, monthly sales etc. However, it may also result in the oft-repeated lament about end-of-month budgeting for employees.
Choosing the Right Payroll Cycle
When choosing a payroll cycle, businesses need to consider their cash flow and the payment preferences of their employees. It is important to select a payroll cycle that meets the needs of both the employer and the employee. Here are some factors to consider when choosing a payroll cycle:
- Cash Flow: The payment schedule can impact the cash flow of the business. Employers need to choose a payroll cycle that aligns with their cash flow.
- Employee Needs: Employers need to consider the payment preferences of their employees. Employees need a payment schedule that allows them to budget and plan their expenses.
- Processing Time: Employers need to consider the time and resources required to process payment. A payment cycle that requires less processing time saves resources.
Multiple Payroll Cycles
Multiple payroll cycles are useful for businesses. Some use cases include:
- Different groups of employees paid at different times of the month, for example sales personnel getting commission payments sooner than salaries of other employees.
- Businesses that have a mix of full-time employees paid monthly and part-time employees paid weekly.
- The ability to pay expense claims separately from monthly salaries.
However, most businesses don’t use multiple payroll cycles despite its usefulness. This is because dealing with multiple payroll cycles is complex and requires more processing resources. Overlapping pay periods mean that the potential for errors is much higher.
Make Even Multiple Payroll Cycles Easy with BrioHR
Processing payroll can be repetitive and error-prone, but it doesn’t have to be with BrioHR. Whether you pay your employees weekly, bi-weekly, monthly or otherwise, BrioHR is able to calculate everything correctly – including statutory deductions, taxes, expense claims and more.
Furthermore, BrioHR can now also run multiple payroll cycles. Let’s say you have some employees that you pay weekly, while others are paid monthly, you can now manage their payroll in one, integrated platform.
With a secure, scalable, user-friendly platform, BrioHR covers the entire employee journey from recruitment to onboarding, payroll and claims, to performance and analytics, and more.
This enables business owners and HR teams to truly focus on what matters most – people.
Visit briohr.com and get a free demo now.
