6 Risks & Inefficiencies Associated With Manual Payroll

Can you be thoroughly sure that present payroll process that your organization is performing pay complete attention to the listed:

Compliance
Efficiency
Security
Free from errors

What do you think regarding potential consequences if in case you fail to make sure that your payroll runs meet relevant needs?

Such risks are what most businesses using manual pay run processes face every week. The outcome unnecessarily is an increased risk profile, which can lead to considerable penalties & potentially irreparable damage to business brand from where recovery seems impossible.

What is mostly overlooked is not only potential compliance risks but even paradoxical belief that it is worthless to invest in all in one payroll software system as it costs more money.

However, the time saved by utilizing the all in one software for payroll can serve as secondary implications on switching bandwidth to other business functions, which can ameliorate efficiency and save money, both.

So, what are some of the common indications of a problematic manual payroll system?

Inefficiency in manual payroll system

Manual payroll software of working through & creating pay runs includes the procedure of copying & pasting the hours in a timesheet in the payroll software.

Mostly, this is entered in a feature within the company’s software, where it is able to easily calculate the basic conditions like superannuation and tax. However, it would leave out crucial areas like additional loading & penalty rates.

After this the data/information gets entered on to the payslip templates. Here potential mistakes are possible as the the data gets entered manually. It infers that payslip of every employee must be checked properly before getting issued. Thus, it is nothing but crucial waste of time as it makes you to double check.

With roll out of the single touch payroll & more third party reporting on field, organizations get subject to higher risk in regard to non compliance if they are unable to meet their particular deadlines, especially when they are using a manual payroll system.

Agreements regarding modern awards & enterprise are getting increasingly complicated and usually need ongoing in-depth knowledge about changes – which many businesses do not have the time for unless they get a specialized payroll or a legal department.

Using the manual payroll software as just an attempt for adhering to it, makes it complex, which thereby makes it a time consuming procedure. Also, it is treacherous for organizations that function in various locations witnessing legislative changes in their states.

Non compliant module of modern awards & EBA

With roll out of a single touch payroll & consistent third party reportings, organizations get subject to higher danger of non compliance in case they are unable to report particular deadlines, especially when they are using the manual payroll software.

Note that EBA (Enterprise Bargaining Agreements) and modern awards are day by day becoming complicated and mostly need ongoing knowledge of various changes. This is something, which organizations cannot focus on due to lack of time unless they contain a specialized payroll/legal department.

Inefficient in checking requests and leave balances

Apart from being paid well, one of the crucial aspects of an employee’s or staff’s remuneration package is in regard to leave entitlements.

As staffs work for a longer time within a company, the procedure of accruing the leave entitlements is a crucial task that should not be underestimated.

Payroll teams and business owners taking help of manual payroll software spend every week in the following:

For accumulating leave request
Ensuring the employees have adequate leave in their ESS balance
Checking if the leave balance is signed off by their manager
Adjusting hours taken on form and make sure that is tracked at least somewhere.

For conducting such activities the level of committing manual errors are high and again needs multiple staff for checking it to ensure that such mistakes or errors are well captured before leave gets processed.

Risk of brain drain

The manual payroll software is usually created to be understood just by a limited group of employees within an organization.

In events of employee turnover, owing to zero adequate documents of manual payroll software, this information can virtually vanish overnight when the staff managing it leaves the company.

Incorporating all in one payroll system can manage it. Just by automating numerous processes that need little knowledge or understanding, the software is designed to efficiently conduct checks & balances on all the payroll aspects that staff member typically do in case of manual payroll software.

Inefficient hard copy reviews that are pay run

Being a standard throughout all the payroll procedures, approval requires to be conducted in the form of a chain. In manual payroll software, a hard copy of the report gets printed off & is given to the Finance Manager or even the CFO for a quick review.

Then the Finance Manager annotates all the printed off copies just before they are returned to the finance department to get processed for changes.

Once it is done, the pay run gets finalized, pay slips are sent manually, lodgements like superannuation get completed before batch files are sent to company internet banking for execution of payments.

Use of cloud based payroll system as solution

From the above clarification it should be clear by now that manual payroll software is inefficient. Turning to cloud based payroll systems will fetch the business benefits in the form of reduction of time spent on various administrative activities like reviewing and data entry.

Activities like payslips issuance can become automated in the software. Even the staff can easily access their payslips and apply for their leave via ESS functionalities with software.

Outcome is it frees up time and helps you to shift your focus to other work of the organization to ameliorate cost and time.

Lastly, having a cloud based payroll software will even considerably lower risks linked with errors and compliance that mostly happen with manual payroll software. With periodic updates in reference to legislation in the software, businesses can expect to stay at the leading position and be compliant.

Dynamo, is the perfect HR and Payroll solution that runs seamlessly inside Microsoft Dynamics 365 Finance and Operations suitable for all organization’s sizes

Dynamics Business Solutions (DBS) is certified Microsoft Dynamics partner in UAE, we take pride in our ability to develop and deploy the right business solution that matches global client’s requirements.

To know more, speak to our expert at Dubai: +971 4 447 5525 Abu Dhabi: +971 2 222 2100 or inbox us your query at dynamo@dynamics.ae OR visit www.dynamics.ae