Blog

Impactful Benefits of Digitizing Payroll Management in Construction

Impactful Benefits of Digitizing Payroll Management in Construction

November 28, 2022

This article is from our friends at factoHR.

Digitization is bringing the construction industry into the modern day. Technology has helped contractors complete their projects in just half the time, along with increased safety measures. Today, tech is mandatory to achieve efficiency and save costs.

Digital solutions are also helpful to construction businesses in dealing with their administrative tasks. They address the challenges of tracking workers’ on-site attendance, managing shifts, and maintaining work logs. In addition, they solve a significant challenge for managers–handling the salary process.

Payroll can be a complex and time-consuming process for any business, affecting productivity negatively. Labor is the most significant expense of many firms, and any process involving labor and payroll significantly impacts your finances. According to BotKeeper, construction companies’ labor costs can range from 20% to 40% of total costs 1, making it necessary to optimize workers’ paychecks. Automated systems help construction businesses get the most out of their salary processes and save costs.

Construction payroll software benefits

Automating the salary process for construction companies involves streamlining all the complex processes payroll management entails. Cloud-based payroll software’s various features include the following:

  • Recording personnel data
  • Calculating total work hours
  • Computing labor costs based on the hours worked
  • Direct depositing salaries
  • Additionally, it helps you stay compliant with state tax laws and regulations.

Here are the best ways you can use payroll software to streamline the salary process:

Linking payroll systems with timesheet tools

Most construction businesses compute wages based on work hours but getting accurate data on workers’ attendance takes a lot of work. There might be scenarios where workers have worked fewer hours or have worked at multiple locations. Sometimes, laborers joined the project informally, making it difficult to track their hours. In all these scenarios, calculating accurate wages becomes nearly impossible due to irregular attendance records.

An attendance tracking tool helps to get the employees’ locations and attendance data quickly. Linking timesheet tools with your payroll software results in accurate time records and salaries, enhancing productivity. HRMS software is also an option, which manages both processes from a single space.

Aside from attendance, your timesheet tool’s integration with the payroll system helps you to generate accurate salaries based on the workers’ tasks. In addition, it keeps you updated with all ongoing projects so you can stay on top of all processes and business costs.

Maintaining personnel records

Maintaining employee records demands significant time and attention, and a cumbersome process can harm productivity. Physical paperwork could result in high costs and environmental waste, and managing it is tedious.

A payroll system with an employee database that can store personal details and makes it easier to take a quick overview saves time and costs, making administrative tasks more straightforward and efficient.

Setting effective payroll policies

Due to uncertainty around the job site’s locations and labor needs, it becomes difficult for managers to set a work policy. Policies are necessary to ensure that laborers work uniformly, contributing to the project optimally. It provides a roadmap for day-to-day operations and enables a standard operating procedure. And the aligned workforce is easy to manage, so it is crucial to set effective policies.

A sound payroll system allows you to set different policies according to business needs. You can configure the attendance, leave, and salary policies for other branches and workers–eliminating the complexities. Determining shift timings, hourly wage rates, overtime rates, and calculation methods are also doable in a single system, simplifying the work. It helps you meet all work parameters and improve employee management.

Complying with state taxes and laws

Paying contractors and workers is not the only function of payroll management; the company has to manage taxation and meet all the regulations. Even a tiny mistake in managing compliance requirements can result in costly penalties, decreasing profits.

Automating the payroll process streamlines the compliance process and reduces complications as it helps you to follow the latest tax laws & regulations and calculate payable taxes. Some systems also allow filing and paying taxes right from the system.

Generating reports

Keeping track of payroll is critical in business finance, so optimizing it is mandatory. Data insights help your company make sound decisions by providing information about how every action impacts the business, allowing managers and executives to build strategies accordingly.

To comply with agency requirements, many contractors must prepare detailed and precise reports for government agencies. However, the manual preparation of these reports can be burdensome and complicated, so automated systems ensure accuracy and efficiency.

Improving employee experience

Paying accurate wages on time is the most valuable step in increasing employee job satisfaction. Assisting workers in their legal tax filings, uploading their documents, solving queries, and, most importantly, generating precise salaries contributes to employee retention. According to Autodesk, the construction industry has an average turnover rate of 21.4% 2, making it one of the highest on the list. It is essential to focus on retention activities and improve the employee experience.

The payroll system optimizes the employees’ experience by automating the payslips and providing them access to their personal information. Workers can edit their names, phone numbers, addresses, and other personal data anytime. They can even raise support tickets for any query related to their salary, streamlining communication.


Payroll software simplifies the salary process and saves construction companies money. By providing managers with complete control over the payroll process, unnecessary complexity is eliminated.

  1. What percentage of construction costs is labor? Pricing your bids correctly. (n.d.). Botkeeper
  2. Ellis, G. (2022, March 23). 100+ construction industry statistics.