BSI Article: How to handle the payroll processing fallout from the COVID-19 lockdown

We are living through what the ancient Chinese, with a subtle blend of wit and malice, wished upon their enemies: interesting times.

The COVID-19 virus, and the unprecedented lockdown it triggered worldwide, has upended the life that we all used to know. Enough said; anything more would be a recital of what you already know.

In the context of the worldwide upheaval we are witnessing, certain problems that we may be wrestling with may appear puny.

But this worldwide upheaval has triggered multitudes of such "puny" problems; and having them all confront us at the same time is pretty much what makes for a catastrophe.

Balmori Software supports
your migration to the cloud

In recent weeks, many of our customers have started making serious investigations into migrating to the cloud.

We are pleased to assure our client base that all Balmori Software software solutions will run on the cloud.

Balmori Software can support cloud intenders - from the migration phase all the way to the maintenance phase. We provide configuration advice, planning, and implementation.

We can also do actual installation of apps in the cloud server of your choice, and do remote or in-person set up of the work stations at your various company geographical locations (i.e., officers' and key team members' homes).

Your migration to the cloud can be done entirely remotely. Balmori Software can handhold you, from the moment you decide you want to be in the cloud, all the way to maintaining your online resources. When the COVID-19 lockdown ends, Balmori Software can offer you the alternative of physical visitations.

What will the cloud experience be like for the typical lay user? If your organization migrates your Balmori Software solution to the cloud, your staff would be accessing it in exactly the same way they currently access it in your existing office-based LAN client-server network.

In short, the experience would be no different when your various apps are in the cloud. Except, you're likely to be pleasantly surprised: on the cloud, you'll most likely experience faster response times from whatever application you're using.
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Setting the world to rights requires each of us dealing with such problems as present themselves to us in our particular personal circumstances.

One of these problems is, How do we account for the period of lockdown in our computerized payroll systems?

There are two main scenarios Philippine (nay, the world's) companies face, and each of course calls for a different response:

SCENARIO 1. During the lockdown, your company suspended operations, and also was not able to pay salaries, likely due to illiquidity brought on by not doing business.

In this scenario, your employees should have received cash under the Small Business Wage Subsidy Program of DOLE and SSS.

If your employees did receive this subsidy, they would have received it either directly into their bank accounts, or in cash remittances coursed through the Lhuillier remittance company.

But whether your workers received the cash subsidy or not, the relevant factor here is that your company paid no wages throughout the lockdown period.

Now. The lockdown over, you and your team are now returning to your office premises, booting up your computers, and confronting a payroll system whose last processing was for the period that ended on 2020 March 15th (in the National Capital Region at least).

For the entire period of the lockdown, your payroll system was blank. And should remain blank forevermore. No salaries paid, no tax withheld, no SSS, no HDMF, no Philhealth contributions. And no obligation to pay any of those statutory contributions for the entire period of lockdown.

Or thereafter.

Let us say that your company opts to resume operations on 2020 July 1st. (Or June 1st. Or June 16th. Your circumstances are your circumstances.)

Here's what you'll want. You will want to have absolutely no activity, no entries, recorded in your payroll system for the entire period that your business was on Pause.

And you'll want your payroll system to resume showing transactions on the day you restart operations. That can be July 1st, or June 1st if you started earlier, or June 16th, if you started then.

Therefore, you'll want your payroll system to reflect normal activity for 2020 January 01 - March 15, then absolutely no activity for the period of the lockdown, then normal activity again starting from the date you resume business operations.

How do you effect these desired manifestations in your payroll software?

If you are a user of Balmori Software's SURE! PayMaster, Balmori Software is extending a recovery service to our customers to do this very thing.

(If you're not a Balmori Software customer, ask your payroll software vendor to help you out.)

We will take your payroll data for 2020 year-to-date, and we will reset your payroll such that (a) the data for January 1 - March 15 are preserved, (b) payroll processing resumes afresh on July 1 (or whatever date you resumed operations); and (c) leaves the payroll for the lockdown period completely devoid of data (you will tell us the dates of your particular company's lockdown period).

To avail of this service, send us an email and our tech team will get back to you.

But, you ask, what about that last pay period before the lockdown - 2020 March 01 - 15? That's a half-month; aren't there some issues, some deductions left hanging because it's not a completed month?

You will be relieved to hear: if you are a SURE! PayMaster user, there is absolutely nothing you need to do. This happy circumstance is the result of Balmori Software's particular approach to the architecture of payroll software, whose benefit is now smiling down upon you. To understand this architecting approach, read this.

SCENARIO 2. During the lockdown, your company continued to operate, and continued to pay salaries. Lucky you. If this is your situation, you have no problem with your payroll back room.

You have been operating as usual all through the lockdown, and assuming that you remained liquid, you kept on paying salaries.

Wonderful. More power to you.

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But what if you - although continuing to operate and liquid enough to pay wages - could not access your office premises, and as a result, were unable to access your payroll system in your computer, and therefore were obliged to process your payroll manually, outside your accustomed payroll app?

If you are fortunate enough to be in this situation, you have a simple, albeit tedious task: Re-input, recompute, and reprocess every single pay period that transpired during the lockdown.

In doing this, you are duplicating the processing you had (presumably) already done manually during the lockdown: Re-inputting the time parameters of worker earnings. Re-inputting adjusting entries. Re-outputting payroll amounts that you had already computed manually. Why?

The point here of course is to capture the payroll data within your accustomed payroll software. Why?

Because your payroll software needs to know all employees' pay data for the entire year. And it needs the entire year's data to be able to give accurate reports to all four government agencies that require their pound of flesh from the formal economy.

Now, what if the payroll data outputted by your accustomed payroll software turns out not to jibe with the payroll numbers that you computed manually during the lockdown?

You know that could easily happen, because ... Murphy's Law.

If that happens, you clean up that mess by ... making adjusting entries in future pay periods. You still have a handful of months left in 2020 to do that.

If this is your situation, congratulations. You are both blessed with a viable business, and zero headaches in reuniting your payroll data with your accustomed app.
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