Changing Salary Disbursement Date: How Do I Set the Right Cut-off and Manage the Transition?

Hi to all the members of Citehr community,

I am working in a Pharma company. Currently, we disburse the salary on the 7th of every month. However, the management has decided to change the salary disbursement date to the 1st of every month.

I need to revamp the entire system. Please assist me in determining the appropriate cut-off date to use and how to effectively manage all the necessary tasks.

Urgent help is required...

Dear Friend,

It all depends on the size of your organization. How much time it takes for you to prepare the salary and its disbursement. Keeping that in mind, you can start on a date, for example, if it takes you four days to prepare and finalize your payroll, that means you should start on the 2nd or 3rd effectively. When you have to pay on the 1st of the next month, it means you should consider the 24th of the previous month as the last day of the month.

I hope you can plan your things accordingly.

Best Wishes,
Debashis

What other adjustments do we have to make and what other changes and record-keeping will be required every month?

Is it wise to opt for the change over the current practice?

Hi,

The cut-off date for making payment on the 1st is usually the 24th or 25th. If you have too many branches, then the 23rd is desirable.

I don't think any change is required anywhere. Having said this, I would like to highlight the extra payment that you may be making in some cases, and these adjustments need to be done. When you switch over, you will see what happens.

1st Jan to 31st Jan - Cut off 31st - Salary paid on 7th Feb
25th Jan to 24th Feb - Cut off 24th Feb - Salary paid on 1st March

You will find an overlap from Jan 24th to Jan 31st. Actually, this will not be overlapped; instead, the days between 25th Feb to 28th Feb will be treated as present for all employees. If an employee has taken any leave without pay, they would have received the payment, and the same will be adjusted only during the next month. This is the only risk, if you can call it that, involved. Whenever an employee resigns, this has to be looked at, and adjustments made.

Otherwise, there are no changes involved.

Siva