Anyone in construction will tell you that it’s important to have the right tool for the job. Not only does it help ensure better results, most of the time it is safer and more efficient. And although this is universally accepted as true in the field, it’s not always considered important in the back office. This leaves many construction companies using software that isn’t specific to their needs for important tasks such as project management, time and attendance and payroll.
In reality, having industry-specific tools in the office is just as important as in the field, especially for construction payroll. Construction companies that work on government contracts have an even greater need to use software built to handle the unique requirements of government work. This includes certified payroll and compliance reporting.
Certified payroll software supports the compliance and reporting needs specific to prevailing wage work. This results in a far more efficient and accurate payroll process, with less compliance risk. And while not every certified payroll software offers the same benefits, there are some significant advantages to be had by switching from general payroll to certified payroll software.
Advantages of certified payroll software
- Increased payroll accuracy
Payroll accuracy is tied to several factors, from tracking time to making sure wages are correctly assigned. Government contractors have to deal with additional factors, including work classifications and wage determinations, both of which change regularly. Then there are fringe benefits that must be paid. Mistakes in any of these areas can result in overpaying, underpaying or being out of compliance and at risk for government action, fines and lawsuits.Certified payroll software generally helps improve accuracy in these areas, leaving less room for errors. This may include making it easier to determine the correct wage and fringe rates, along with flagging potential errors and simplifying restitution when needed.
- Reduced financial and legal risk
Every industry has basic laws to comply with, but government contractors have their hands full when it comes to compliance. Work classifications must be accurately tracked and tied to the correct prevailing wage rate. Fringes must be handled correctly, and everything must be reported weekly to the awarding agency or government body. Mistakes must be corrected quickly, and at any point you can be audited. If mistakes are found, you could be subject to penalty, including paying back wages and fringes, fines or even legal action.Certified payroll software can make it easier to stay in compliance by reducing the types of errors that put you at risk, like not paying the correct prevailing wage rate. It may also flag areas of potential concern, like changing wage determinations, underpaying fringes, or missing apprenticeship information.
- Simplified reporting
Reports are a basic business function that can offer a snapshot of your company’s financial and operational success. This information can help you make better business decisions, but also may be required by law in some circumstances. Government contractors have the additional burden of weekly certified payroll reporting, including non-performance statements, apprenticeship, training fund and union related reports.General payroll software typically offers standard reporting options which are insufficient for government contractors. Certified payroll software, on the other hand, often has reports built in so you can generate and submit required reports with less time and stress.
- More efficient payroll process
Payroll may be a standard business function, but that doesn’t mean it is simple. There is a lot of time, energy and effort that goes into getting employees paid. The added compliance requirements of government contracts make payroll an even more cumbersome task. With general payroll software, this is increased further because workers must manually check wage rates, fringe rates, and often transfer data by hand into government reporting portals.Certified payroll software can provide verifications on some data points so that less time is spent verifying things like prevailing wage and fringe rates. Often times you can also create and export data in formats that makes required reporting much quicker.
- Improved bids: Bids are how new business is won, which makes the process of bidding a basic but important part of being a government contractor. Your ability to create competitive bids relies on many factors, including the accuracy of your data. If you bid too high, you could miss out on business, but if you bid too low, you may run at a loss. All software depends on the accuracy of the data you put into it, but general payroll software can leave you with blind spots when it comes to labor costs.Certified payroll software can help you have a better understanding of the cost associated with prevailing wage labor. You’ll be able to see how you use your skilled workforce and create more accurate labor cost projections, which will improve the accuracy and competitiveness of your bids.
Most payroll software is sufficient to handle the basics of paying employees and reporting, but insufficient to deal with the elevated needs of government contractors. Certified payroll software, however, can make payroll and compliance easier by providing tools to solve specific prevailing wage problems. This may include more accurate time and work classification tracking, wage determination verification, red flags for underpaying against prevailing wages, enhanced fringe management, compliance reporting and simplified wage restitution. This can save your company lots of admin time, risk and money, which makes the initial pain of switching payroll software well worth the trouble.
Not sure how to switch software? Check out our guide for tips on implementing new software more easily in your organization.
Learn six ways software can help your company be more competitive.
Seven things to consider before selecting time and attendance software.
The material presented here is educational in nature and is not intended to be, nor should be relied upon, as legal or financial advice. Please consult with an attorney or financial professional for advice.