Payroll process flowchart (cut-off to payment and filing)
Payroll process flowchart from cut-off to payment: starters and leavers, approved hours, variance checks, gross-to-net, an independent pre-payment review, funding, the bank file, statutory filing, payslips and the journal.
How it works
Rename the lanes to your own organisation
Replace Employee, Line manager, HR, Payroll administrator, Payroll manager and Finance and treasury with the roles you have. The two payroll lanes are the point of the chart, so do not merge them without deciding who else will hold the review. If payroll is outsourced, keep the provider as one lane and add a retained lane for the person who signs off their output, because the accountability does not leave with the processing. Where HR and payroll are one desk, merge those lanes rather than drawing a hand-off nobody makes.
Put the cut-off calendar into the chart
"Payroll cut-off announced for the period" is inert until it carries dates. Publish the whole year at once: input cut-off, approval cut-off, funding date, payday and filing date for every period, with the ones shifted by bank holidays marked. Then state what actually happens to a late input — held to the next run, or handled off-cycle at a cost somebody has to authorise. A cut-off with no stated consequence is one the noisiest manager renegotiates every month, and it is always the same manager.
Set the variance thresholds in figures
"Load inputs and run validation checks" needs numbers before it means anything. Most teams flag a movement in gross pay against the prior period on a percentage and a cash floor together, so a small salary does not trip on every overtime hour and a large one does not hide a real error. Set them so the exception report comes back at a length somebody will genuinely read: two hundred lines are read about as carefully as none. Then name who clears each exception, and keep the cleared report, because that is the evidence the check was run rather than skipped.
Give the independent review a named holder
The control fails quietly when the reviewer is nominal. Name the role rather than the person, and make sure the holder sits outside the preparation: a finance manager, the HR director, the provider's own reviewer, or an external accountant on a small team. Give them the pack in a form they can argue with, and give them a slot in the calendar before the funding deadline, because a review squeezed into the hour before the bank cut-off is a signature rather than a review. Then decide where the sign-off is recorded, since that record is what an auditor asks for.
Attach your filing and pension deadlines
"Submit statutory filing and pensions" is jurisdiction-specific and it is where penalties live. In the UK that means a Full Payment Submission on or before payday, an Employer Payment Summary where one is due, and pension contributions paid inside their own statutory window. Write your own deadlines onto the step, and name both who files and who confirms the submission was accepted rather than merely sent. Decide what happens when one is rejected: a return that bounced overnight, with the notice unread, is the commonest way a deadline is missed by an organisation that believed it had met it.
Agree the correction policy, then walk it through and publish a version
Settle "Correct in an off-cycle run?" before you need it: the hardship test that forces an immediate payment, who authorises the cost, and the rule for recovering an overpayment, which is a legal question rather than an administrative one. Then walk the finished chart through with a payroll administrator, whoever holds the review, HR and treasury, correct it to what they actually do rather than what the manual says, and publish that revision while keeping the earlier ones, so anyone opening it later can tell which version they are reading.
Frequently asked questions
What are the steps in a payroll process?
A pay period runs like this: announce the cut-off; collect starters, leavers and permanent changes from HR; collect timesheets, overtime, absence and any expenses reimbursed through the payslip, with the line manager approving hours; check every input has arrived by cut-off and chase or defer what has not; load the inputs and run validation and variance checks against the prior period; investigate and correct anything unexplained at source; calculate gross to net; prepare a pre-payment control pack and have it reviewed by someone who did not prepare the run; approve the cost and confirm the funding; release the payment file to the bank; make the statutory filing, which in the UK is due on or before payday, and pay pension contributions inside their own window; publish payslips; post the payroll journal to the ledger; and archive the evidence. Errors found after payday go to a decision about an off-cycle run rather than being carried by default.
What is segregation of duties in payroll, and how does it work in a small team?
In most organisations the payroll figures are seen by two or three people before the money moves, so the review before payment is the only outside check they get. Segregation of duties means the person who prepares the run is not the person who approves the cost and not the person who releases the file at the bank. The risk it addresses is not only fraud — a fictitious employee, an altered bank account — but the ordinary keying error that reaches everyone on the payroll at once and is discovered by them rather than by finance. In this chart it is a step, "Independent pre-payment review", rather than a policy sentence, and what it produces is a dated sign-off. Small teams cannot always split three ways, so split the two that matter most: whoever prepares the run must not release the payment. The reviewer need not sit in payroll at all — a finance manager, the HR director or an external accountant can hold it, provided they are given the pack and the time to use it.
How is this different from the HR processes that feed payroll?
This page is the run, not the events that change it. The employee onboarding process at /templates/employee-onboarding-process covers getting a new hire contracted, checked, provisioned and enrolled; the employee offboarding process at /templates/employee-offboarding-process covers notice, handover, access removal and final pay; and the leave request process at /templates/leave-request-process covers entitlement, cover and manager approval for time off. All three end where this chart begins, arriving as "Collect starters, leavers and changes" or as approved absence tested at "All inputs received by cut-off?". Expense claims are the same: they are validated and approved in the expense approval process at /templates/expense-approval-process and only appear here if you reimburse through the payslip. Use those templates to fix why the input is late or wrong. Use this one to fix what the payroll run does with the inputs it receives, and what happens when they do not arrive.
What should happen when an employee has been overpaid?
Treat it as a legal question before an administrative one, and establish the facts first: the amount, the periods it covers and how it happened. In the UK the Employment Rights Act 1996 excepts the recovery of an overpayment of wages from the rules on unlawful deductions, so an employer is not barred from taking it from pay — but that is a long way from taking it unannounced. Tell the employee in writing, agree a repayment schedule they can actually meet, and spread a large recovery over several periods rather than clearing it out of one net payment. Where the person has already left there is nothing to deduct from and it becomes a debt to be asked for. Take advice where the sum is significant, the employee disputes it or the error ran for a long time, because someone who reasonably believed the money was theirs and has spent it may have a defence. Then fix the cause: most overpayments are a leaver notified after cut-off, which is a hand-off problem rather than a payroll one.
Should a payroll error be corrected off-cycle or in the next run?
Decide it against a written test rather than by whoever asks loudest. An off-cycle, or supplementary, run costs money — a payment file, a bank charge, a second statutory submission and someone's afternoon — so it is not the default. It is the right answer when the employee has been left materially short, when a statutory payment such as sick or maternity pay has been missed, or when the error affects enough people that waiting is untenable. Carrying the correction to the next period is reasonable for small amounts and for an overpayment already agreed as recoverable. Log the cause either way, so the same variance does not reappear next month. In this chart the choice is drawn as "Correct in an off-cycle run?" in the Payroll manager lane, and the Off-cycle branch loops back through "Submit statutory filing and pensions" rather than ending, because a supplementary run carries its own return, its own payslip and its own journal.