What is a Payroll Cycle?

A payroll cycle is the length of time between payrolls. Thus, if an entity pays its employees every Friday, this is a one-week payroll cycle, whereas paying them once a month is a monthly payroll cycle. Employers prefer longer payroll cycles, since a reduced aggregate amount of processing labor is required to calculate a smaller number of payrolls per year.

Steps in the Payroll Cycle

There are several steps in a payroll cycle that must be completed in order to pay employees both correctly and on time. The steps are as follows:

Collect time worked information from workers. This information may be collected through time sheets, time cards, biometric devices, phone apps, or other data collection systems.
Validate the time worked. This involves having supervisors review and approve time worked information.
Load time worked information into the payroll system. In addition to loading in this information, taxes and benefit deductions must then be subtracted from the calculated gross pay amount to arrive at the net pay for each person.
Pay employees. Payments must be distributed to employees, which may be in the form of cash, checks, direct deposit payments, or pay cards.