Payroll & Compliance
Paying Salaries by M-Pesa and Bank: Keeping the Records Straight
Many Kenyan employers pay some staff by bank and others by M-Pesa. The payments are easy; keeping them reconciled with payroll is where things slip.
Most organisations would never let one person approve their own payment to a supplier. Many let one person prepare, approve and release payroll every month.
By StepUp Team
Ask a finance team how supplier payments are approved and you will hear about purchase orders, approval limits and two signatories. Ask how payroll is approved and the answer is often: the payroll officer prepares it and sends it to the bank.
Payroll is usually an organisation's largest single cost. It is also the payment most often released on the word of one person.
Most payroll errors are not fraud. They are ordinary mistakes:
Each is easy to spot for someone looking at the payroll fresh. Each is easy to miss for the person who has been building it all week.
Fraud does happen, and the patterns are well known: ghost employees, inflated overtime, bank details changed just before payday. All of them depend on one person controlling the process from start to finish.
Separate preparation from approval. The person who prepares payroll should not be the person who approves it. In a small organisation, the approver may be the owner or finance lead; that is fine, as long as it is someone else.
Review the changes, not the whole payroll. Nobody can usefully check 300 payslips line by line. A good review focuses on what changed since last month: new joiners, leavers, salary changes, unusual payments and changed bank details.
Compare totals. Gross pay, net pay and statutory deductions against last month. A big movement needs an explanation before approval, not after.
Lock it once approved. Changes made after approval should require a new approval. Otherwise the approval means nothing.
Keep an audit log. Who changed what, when and why. When a question comes up six months later, the log answers it in minutes.
The most damaging single change in payroll is a changed bank account. A request to update bank details, especially one that arrives just before payday, by email or through someone other than the employee, is the classic route for payroll fraud.
Treat bank detail changes as a separate, verified step (we cover this in more detail in paying salaries by M-Pesa and bank): confirm with the employee through a known channel, record who approved it, and flag it in the payroll review.
Payroll staff sometimes see approval as a sign of mistrust. It is the opposite. When something goes wrong — and in payroll, something eventually does — an approved process with a clear log protects the person who prepared it. Without it, they carry the blame alone.
Approval works when it is part of the system rather than a reminder in someone's calendar.
StepUp HRM's payroll automation separates payroll preparation from approval, highlights changes since the last run, keeps an audit log of every change and locks approved runs. Finance approves with the right information in front of them, and nobody has to rely on memory to explain what happened.
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