Payroll Processing System – How To Choose The Right Software
The most critical resource for an organization is its employees who are the soul of the organization. As the soul of the organization, their management takes the foremost importance for the human resources department. Whether it is a small organization or a multi-national company, the work for the human resources department has always been cut out. The size of the organization and the sector of the economy brings on to the table challenges that are unique to that particular industry. The human resources department has to strike a fine balance between what is right for the organization and what is right for the employees. One of the most important functions of the human resources department that is salient for the working of an organization is payroll processing. The basic premise of employment is to gain monetary compensation in lieu of the work done for the organization. In fact, one of the biggest factors that employee look for before joining any new company is their compensation package and the payroll processing date as everyone wants the salary on time every month. In simple terms, payroll processing refers to the disbursement of salary to the employees of the organization. But is it so easy to hand-out money to the employees at the end of every month or does it require a bit more?
If there are only five-ten employees in the company, it is easier to keep track of their respective salaries and hand them in cash at the end of the month. But if there are hundreds of employees with different compensation packages, things turn a tad bit more difficult. Add attendance management, leave management, and bank accounts to the mix and you are looking at spreadsheets that would not end and calculations that will take forever. The only feasible solution for payroll processing is an online payroll processing system that takes care of the whole process from the start to the end.
What Is A Payroll Processing System?
A payroll processing system refers to the system of the payment of the monthly wages to the employees by the organization. It takes into account the number of hours or days worked by the employees, their pay rate, and their applicable deductions. A payroll processing system can be maintained completely manually, through a spreadsheet, or through an online payroll processing system.
Just like an attendance management system, a payroll processing system can either be a standalone system or a part of an integrated human resources management system package. When it comes in a human resources management package, it is integrated internally with the attendance management system and the leave management system. Therefore, there is no manual input required as it generates the payroll automatically based on the attendance registered for the specific pay period through the attendance management system. In the same way, the integration with the leave management system enables it to calculate the vacation days on its own. There are no lengthy and complex spreadsheets required as the system takes into account all the deduction applicable for the employees on its own and calculates the net pay automatically, reducing both the chances of error and your workload.
Why You Should Have A Payroll Processing System?
A payroll processing system is one of the most critical pillars for any organization, regardless of its size, sector, or industry. Since the basic premise of any job is monetary compensation for the work done by the employees, any failure in fulfilling this system would lead to complete failure of the organization. On the paper, it may seem that the generation of a pay slip is a straight-forward process but there are multiple processes that go behind the curtain to ensure that the payslip generated is accurate.
Since the payroll is often the largest expense incurred by an organization, it becomes imperative for the organization to ensure that the payroll processing system is as accurate and error-free as possible. Along with a large amount of finance involved in this system, there are legal ramifications involved for the organization too. The timely processing of the salaries of the employees is extremely important but so is the compliance to laws and regulations prevalent in the region that should never be compromised at any cost. Any organization needs to adhere to labor laws, pay taxes to the concerned government agencies, deduct PF from the employees’ salaries and deposit in the retirement accounts. Additionally, there may be insurance premiums to be paid, and other deductions to be made. Any small miscalculation can lead to hefty fines and huge legal and financial ramifications that can have disastrous consequences for the organization. To avoid all these hassles, it is imperative that a payroll
Having a payroll processing system in place also ensures greater control over your payroll data. From maintaining and tracking payroll data to customized report generation based on different attributes, you have everything at your disposal with a few clicks. Since there is no data compilation required from the human resources department’s end, this is one less thing for you to worry about and work on.
Must-Have Features Checklist
Having just any payroll processing system is not enough. What one needs is an effective payroll processing system that streamlines the whole process while integrating parallel processes to save time and goes beyond just the basic functioning required from a payroll processing system. Having an efficient payroll processing system reduces wastage of time and resources, not to mention reduced workload and fewer errors. Here is a comprehensive list of all the features that should be present in a state-of-art payroll processing system:
- Completely automated payroll processing with a single click that requires the least amount of manual effort
- Real-time, cloud-based payroll database creation that can be accessed anytime anywhere
- Easily configurable system for easy modifications according to the requirements of the organization
- Cutting-edge data encryption to ensure data privacy and security
- Customizable salary structures with multiple salary components
- Provision for multiple salary structures and pay packages within the same pay slab
- Integration with the attendance management system for streamlined calculation of working and non-working days
- Integration with the leave management system for monitoring paid and unpaid leaves for salary calculation
- Accurate salary computation with a guided checklist for reference
- Automated calculation of reimbursements, advances, bonuses, and loans
- Comprehensive payroll database creation to maintain and track past payroll records
- Automatic system and process updation for statutory compliance with the latest laws and amendments like
- Calculation of PF with the generation of ECR
- PT, ESI and TDS calculations
- Labour Welfare Fund calculations
- Digitally signed and generated taxation forms like Form 12B, Form 16, and Form 24Q
- Automatic system and process updation for statutory compliance with the latest laws and amendments like
- Automatic generation and distribution of customized payslips at the end of the specified pay period
- Automatic disbursements of salaries at the end of the specified pay period
- Generation of customized management and operations reports for business analytics and insights into performance-based metrics
- Simple interface that lets employees view their payroll information easily
- Payroll updates through messages or emails to notify the employees about updates related to payroll processing
Challenges In Payroll Processing
As payroll is all about numbers and money, there is a lot at stake if things go even slightly wrong. With the huge amount of money involved in the whole payroll processing system, even a small calculation mistake can have huge financial and legal repercussions for the organization. An organization that does not process the paycheck on time or accurately will automatically have a dent in its reputation. Therefore, it makes sense to pay a bit of extra attention to ensure that the whole process goes without any hiccups along the way. Here are a few common challenges that the human resources departments across the world face in the payroll processing system:
One of the most critical points for a payroll processing system is its accuracy and that is the biggest challenge faced by the human resources department. The significance of any data is reduced manifold if it is not real-time and accurate but with the magnitude of the data involved in a payroll processing system, it becomes a huge struggle to have both speed and accuracy without compromising on any of these two factors.
Whatever is the situation, an organization cannot even think of compromising on statutory compliance. Whether it is state taxes or federal taxes or labor laws, any organization needs to ensure that its payroll processing system is always up to date with the latest legislation when it comes to compliance. The human resources department has to continuously remain on its toes in the matters of compliance as they need to ensure that as soon as a new amendment or legislation is passed, it is reflected in the next paycheck. No organization should skimp on compliance costs as non-compliance with the applicable legislation can spell real financial and legal troubles for the organization.
For any organization, its data is its biggest weakness as it constitutes the intellectual capital of the organization. The same goes for the payroll data as it is highly confidential and contains personal details of the employees along with the finances of the organization. It is imperative that any payroll processing system installed in the organization gives utmost importance to data security and ensures that there are no data leaks of any kind. Whether it is through high-end encryption or availability of limited access points, the data protection requirements need to be met by the payroll processing system without any compromises.
For introducing and maintaining any software system on a regular basis in an organization, there are certain costs involved that cannot be avoided like the installation costs or the maintenance cost. Especially in small and medium-sized organizations, the focus is always on cost-cutting as they cannot afford to invest too much in the human resources management systems. But with the right payroll processing system, the costs incurred during acquisition, installation, and maintenance can be easily recovered with the reduction in errors, usage of resources, and workload. A payroll processing system that is laden with useful, additional features would justify its cost on its own and would turn out to be extremely beneficial in the long run even if there is a small investment in the small run. It would also lead to a significant reduction in the workload of the human resources and the accounts department and they can be better utilized for other pressing matters in-hand.
Kredily – The Best Payroll Processing System In Town
Your best bet for a payroll processing system that works wonders for you is Kredily. Armed with all the features that we have discussed above, it goes one step further as it is absolutely free. It efficiently and accurately takes care of the whole payroll process, from start to finish so that you can focus on much more important issues that command your attention.
Automated and cloud-based, it can be accessed from anywhere without compromising on the data security. As it is fully configurable with payroll inputs, it lets you add multiple salary structures with various salary components to suit your pay structure. You don’t need to worry yourself with complex calculations as it automatically generates the payslip after a specified period of time and takes into accounts everything right from taxes, deductions, and allowances, to reimbursements, loans, and advances.
If statutory compliance makes you break into a sweat, you can rest easy as Kredily takes care of PF, ESI, PT, TDS, and LWF for you and keeps itself updated with all the latest rules and regulations to avoid any hassles in the future. It even simplifies the process of tax-filing by facilitating the investment declaration and verification process to be done online.
With the support team having your back to help you with your queries, Kredily ensures that even the human resources department gets to enjoy the salary at the end of the month with no additional stress and effort.