Payroll cycle

The payroll cycle is the recurring process through which an organisation calculates and distributes employee compensation for a defined pay period. Managing this cycle effectively is essential for maintaining employee trust, ensuring compliance with local labour laws, and maintaining accurate financial reporting. At Mercans, payroll cycle management is designed to simplify complex, multi-country payroll operations through automation, accuracy, and transparency. By integrating payroll with HR and time-tracking systems, Mercans enables real-time data flow, reduces manual effort, and ensures every payment is accurate and compliant. Whether operating across one country or 160, Mercans helps businesses achieve complete payroll reliability, data security, and efficiency across all pay cycles.

Common Payroll Cycle Types

Weekly

A weekly payroll cycle involves processing payments once every week, typically resulting in 52 pay periods per year. This cycle is common in industries such as retail, hospitality, and construction, where employees are often paid hourly. Weekly payrolls provide frequent compensation, supporting cash flow needs for employees, but can require more administrative effort for employers.

Bi-weekly

In a bi-weekly payroll cycle, employees are paid every two weeks, creating 26 pay periods per year. This is one of the most widely used payroll schedules as it balances administrative efficiency with regular employee payments. It simplifies benefits calculations and ensures consistency in payroll processing, making it a preferred choice for many global organisations.

Semi-monthly

The semi-monthly cycle issues pay twice a month—commonly on the 15th and last day of each month—resulting in 24 pay periods annually. This schedule is ideal for salaried employees and aligns closely with monthly expense cycles such as rent, utilities, and benefits deductions. Semi-monthly payrolls reduce administrative work while maintaining predictable, timely compensation.

Monthly

A monthly payroll cycle provides one payment per month, creating 12 pay periods annually. This approach is most common for senior-level or international employees and organisations with complex reporting requirements. While it minimises administrative costs, accurate forecasting and communication are essential to ensure employees manage their finances effectively between payments.

Steps in the Payroll Cycle

Gather Employee Data

The payroll process begins with collecting accurate employee information, including personal details, salary structure, tax status, and banking information. Maintaining accurate records ensures smooth payroll execution and compliance with regional regulations.

Time and Attendance

Employee work hours, attendance, leave records, and overtime data must be verified before payroll calculation. Integrated time-tracking systems help reduce errors, ensure transparency, and streamline approvals for variable pay components.

Employee Changes

Adjustments such as new hires, terminations, promotions, or salary revisions must be updated in the payroll system. Keeping employee data current ensures that changes are accurately reflected in the next pay cycle.

Benefits and Deductions

Mandatory and voluntary deductions—including taxes, insurance, retirement contributions, and benefit premiums—are applied according to local labour laws and company policies. Proper management of these deductions ensures compliance and accuracy in net pay calculation.

Calculate Gross Pay

Gross pay represents an employee’s total earnings before deductions, including base salary, bonuses, overtime, and commissions. Automating this calculation through Mercans’ payroll technology helps minimise human error and ensures timely processing.

Calculate Net Pay with Deductions

Net pay, or take-home pay, is determined by subtracting taxes and deductions from gross pay. This step requires precise tax computation, benefit adjustments, and adherence to region-specific legal requirements.

Distribute Payments

Once calculations are finalised, salaries are disbursed through secure payment channels such as direct deposits or electronic transfers. Mercans ensures global payment compliance, currency accuracy, and timely delivery to employees across all geographies.

Record and Report

The final stage of the payroll cycle involves maintaining detailed records for audits, financial reconciliation, and compliance reporting. Accurate payroll data supports transparency, facilitates future planning, and meets statutory reporting obligations in every operating country.