Payroll software: Miles ahead of spreadsheets

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By Thushara
4 minute read ● November 15, 2017
Payroll software

For payroll processing needs, software is superior to spreadsheets in its functionalities and usage model. Using a software for payroll processing goes beyond saving you time and effort. No longer bother with complex calculations or the nitty-gritty of statutory compliance. Let's take a closer look at how software compares with spreadsheets for processing payroll.

Human error

This is veritably the elephant in the room, which we shall get out of the way right at the outset. Using a generic tool such as spreadsheets for your payroll processing needs is an almost surefire way of allowing inadvertent errors to creep into your payroll. These errors include copy-paste issues, formula errors, and the like.

A software, on the other hand, reduces chances of human error by a huge margin by automating all calculations. It is also powerful enough to recognize errors in alpha-numeric codes such as those involved in identity card numbers, employee IDs, etc.

Complex calculations

The calculations involved in computing statutory deductions such as PF, PT, ESI and TDS are complex. This is not to mention the changes in criteria that arise as a company grows and also when laws change, as they frequently do in an evolving legal landscape such as that of India, which makes for calculations that are complex and unwieldy. Such computations are very difficult to code into generic tools such as Excel. As difficult is the business of ensuring accuracy when using such tools.

Specialized payroll software, on the other hand, handles these easily. All calculations - both complex and simple - are handled by the software which is designed to provide you with an accurate output, each and every time.

Effective handling of the payroll workflow

Payroll processing is essentially a workflow in that it consists of performing a series of steps or actions to be taken in succession. Errors in one step in the series can affect calculations in the following steps. Such a workflow is not easy to manage using Excel; neither is the associated error-handling as indicators that Excel provide (for the needs of payroll processing) are limited to very basic ones. This makes troubleshooting as well far more difficult when compared to software.

Payslip generation and distribution

Payslip generation has to be done manually if one is running his/her organization’s payroll on Excel. This, especially with the growth of one’s company, will prove to be an effort- and time-guzzler. Why spend time designing payslips and printing them out when you can perform both the tasks in no more than a few clicks on a software built for the job?

A software also gives you the flexibility of choosing between pre-built templates or opting to create a payslip format of your own. Templates help new payroll users ensure that no fields are missed out on when rolling out your employees’ payslips whereas custom payslips offer you the flexibility to tailor-make your payslips to suit your organization’s needs. Payroll software also provides you with the flexibility to send payslips securely via email or print them just as quickly.

Report generation

In the absence of any report generation features, spreadsheet users often struggle when requests for charts, reports and other types of visualization come in from senior management who need these to make better, more informed employee management decisions. This includes reports around SIF files, bonus calculations, CTC-wise breakup of employees, and numerous other MIS reports.

Payroll software, however, offers a plethora of readily available options to collate any data of your choice and present them in various forms. Report generation can also be automated using payroll software which offers the provision of a one-time setup followed by the generation of reports as per your need each month without any further manual intervention whatsoever.

Employee self-service (ESS)

A feature available exclusively on HR and payroll software, employee self-service is a functionality that provides employees with direct access to all their HR and payroll information. This includes leave-, attendance- and payroll-related information.

Such access to their own information is seen to result in a sharp reduction in the workload for the payroll team as well as queries to the HR team and also results in other positive fallouts that result from a heightened sense of ownership and transparency. The presence of an ESS portal also, importantly, allows for the smooth flow of employee data (payroll inputs) into the payroll system.

ESS functionality is, in short, not feasible when using spreadsheets for payroll processing. Here, all payroll inputs are to collected manually and each employee query calls for manual data retrieval and communication by the HR or payroll team. These invariably prove to be highly repetitive and time-consuming activities.

People dependency

The use of spreadsheets makes for a highly people-dependent payroll process. And one has to be extremely cautious when such critical data as that around payroll is present in such a people-dependent process. Any lack of knowledge transfer between users can result, sometimes, even in the organization’s functioning grinding to a halt. Even a simple oversight such as a forgotten password can result in all hell breaking loose.

With payroll software in place, you can do away with all such dependencies. The vendor provides training and support throughout your period of use of the software. With the possibility of access for multiple users, the process is also rendered person-independent.

Another point of note here regarding the personnel required to handle payroll processing is that Excel calls for a highly proficient user to be able to handle payroll processing efficiently and in an error-free manner. Compare this to software, which can handled even by payroll newbies. The training and handholding provided by the software vendor further eases the process.

Other benefits

Payroll software also offers you other benefits such as bringing employee information storage and the employee help desk online, automation of leave, attendance, and various other workflows, and more. These functionalities ensure that you save a large amount of time and effort and also streamline these processes with minimal effort from your end.

In summary, the use of spreadsheets for payroll means complex formulae to manage, not to mention human error. These leave you at the risk of generating an inaccurate payroll - something you can ill-afford. You’re also foregoing the countless other benefits such as one-click payslip and report generation, ESS, and more that payroll software offers.

Long story short, if your sights are set on leaving your payroll in the hands of experts while you focus on your core business, payroll software is indeed what you need!

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