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What is a payroll run?

Sheriff Subair

Content Marketing, Pade

January 29, 2024

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A payroll run refers to the process behind how your organization calculates and distributes employee salaries, wages, and other related financial transactions. 

This process involves gathering data on employee work hours, earnings, deductions, and taxes and subsequently calculating the net pay that each employee is entitled to receive. 

Payroll runs are conducted on a regular basis, such as weekly or monthly, and are essential if you want accurate and compliant payroll process.

Why should HR leaders care about accurate payroll processing?

Payroll isn’t just a business function. It is an event that influences both the actions of your employees and the overall operations of your business.

Here are some of the reasons why you must put extra focus on how your employees are getting paid.

Employee satisfaction

82% of employees worry more about their finances than their health.

This tells you how fundamental timely and accurate paychecks are to keeping your employees satisfied and motivated. Errors or delays in payroll can lead to financial stress and discontent among your workforce, which can negatively affect their morale and productivity.

Legal compliance

The penalty for non-payment of PAYE in Nigeria is 10% of the tax payable plus annual interest at the bank lending rate.

This penalty, and any other penalties for defaulting on labor and regulatory requirements, could easily be avoided with a comprehensive and efficient payroll run.

An efficient payroll run ensures that your organization remains compliant with regulatory requirements, reducing the risk of legal penalties and disputes.

Financial accuracy

For most businesses, payroll is a significant expense.

Error in payroll disbursement could lead to financial instability for the company. An accurate payroll processing workflow helps ensure that the correct amounts are paid to both your employees and regulatory bodies, preventing overpayments or underpayments.

Cost efficiency

Payroll errors put your company at risk of fines and penalties for non-compliance, as well as mental and financial consequences for your employees.

To avoid paying the price for mistakes, organizations need to work hard to resolve issues before inaccurate payments hit the employees’ bank accounts.

An efficient payroll processing workflow reduces the need for corrective measures and minimizes administrative costs associated with fixing mistakes.

What are the steps involved in an efficient payroll run?

What an ideal payroll run looks like differs from company to company. But here’s a general outline of the steps for a successful payroll run.

Gather employee data

Collect accurate and up-to-date information for each employee, including work hours, attendance, new hires, terminations, salary changes, and other relevant details.

Calculate earnings

Calculate every employee’s regular pay, overtime, bonuses, commissions, and any other compensation that is relevant to your organization.

Calculate deductions and taxes

Determine relevant deductions such as income tax, health insurance benefits, pension fund contributions.

Calculate net pay

Subtract these deductions and taxes from each employee’s gross earnings to calculate their net pay.

Review for accuracy

Double-check all calculations and entries to ensure accuracy before proceeding. With Pade, you can ensure

Process time-off and leaves

Do not forget to account for approved time-off, leaves, or absences that might impact an employee’s pay.

Handle benefits and deductions

Ensure accurate calculation of benefits such as health insurance, pension contributions, and other voluntary deductions.

Review legal compliance

Create a checklist for making sure your payroll run is compliant with local labour laws, tax regulations, and any other regulatory agreement you are required to follow.

Initiate payments

Based on your employees’ chosen payment method, prepare physical paychecks or initiate direct deposits.

Generate pay slips

You must also create pay slips that provide a breakdown of each employee’s earnings, deductions, and net pay. Your employees will receive this electronically and automatically if you run your payroll via Pade.

Process payroll taxes

You must have set aside your organization’s portion of payroll taxes. Ensure that they are accurately reported and remitted to the appropriate authorities.

Document and archive

Next, comprehensive records of the payroll run, including pay slips, tax documents, and reports, for future reference and auditing.

File required reports

Submit any required payroll-related reports to government agencies, as needed.


What your payroll run looks like depends on your organization. However, it is important that you evaluate your process for potential improvements to enhance accuracy and efficiency.

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