HRMS Buyers Guide
HRlab Payroll Systems Payroll Software Benefits

Micah Fairchild The 5 Reasons You Need Payroll Software and Don't Even Know It

3 stars Average rating: 3 (from 48 votes)
 By Micah Fairchild

The Top Reasons Why Payroll Software is Necessary

The endless hours of paper-pushing, filing, checking (and re-checking) of payroll forms, coupled with the incredible cost of these tasks (both physical and human) are reason enough for organizations to deploy a payroll software solution. Yet, few organizations understand that the benefits of payroll software go far beyond just simple cost-reduction and efficiency matters. Indeed, the benefits are as varied as the people within an organization and thanks to advancements in payroll technology (i.e. the Software-as-a-Service delivery model, business process automation, mobile, analytics, new social tools and more), outsourcing the payroll process is no longer the de facto method to achieve these benefits. Here, we've outlined our top 5 reasons why you should seriously rethink payroll software. Consider this a gentle push in the right direction.

Payroll Software Push # 1: Your Employees Want It

According to a recent study by the American Payroll Association (APA) of nearly 30K people, only 9% of employees don't want to be paid electronically. That's compared with 73% who want it or already use it. Either way, the tired excuse that employees don't want to use technology or "paperless payroll" to access their wages is now all but defunct. Indeed, did you know that fully 2/3 of banking customers conduct their business online (according to 2010 research)? And that's voluntary! It's clear that with ubiquitous tethered or wireless Internet access, high speed connectivity from most homes, the constant carrying of mobile devices (including tablets) and the "consumerization" of the workforce in full force, employees will no longer be content to use outdated technology at work.

Payroll Software Push # 2: Regulations are Increasing

Few tasks associated with payroll processing are as troublesome as keeping up with regulatory compliance especially given the myriad recent changes in reporting requirements that have come out. As such, payroll compliance is a task that is best left to a reliable HR or payroll software solution—particularly if your company happens to house operations in multiple states or countries. Indeed, gone are the days of simply writing a check for an employee's services and being done with it. For example, just to name a few:

  • The U.S. Fair Labor Standards Act (FLSA) is increasing in complexity and cracking down harder on violations (even going so far as to hold managers and not just employers liable);
  • The U.S. Equal Pay Act is taking EEO and gender-based workplace discrimination several steps further, and putting compensation equity analysis front and center; and
  • Countries such as France are mandating specific requirements for what can be paid in cash, bank check, or direct deposit

Payroll Software Push # 3: Your Competitors Don't Want You To

As mentioned earlier, efficiencies can certainly be realized in deploying a payroll software solution. But consider this; failing to implement payroll software puts you in the minority of businesses according to a September 2011 study entitled Getting Paid In America. Indeed, only 4%* of organizations are choosing not to utilize automated functions for their payroll processes. So, if there is any part of you that thinks your competition isn't leveraging the tactical gains of payroll software, try benchmarking against this statistic instead.

*It should be noted that "selective" outsourcing is the norm for many U.S. and Canadian organizations, whereas the norm for most global organizations is actually a mix of in-house processing with outsourcing.

Payroll Software Push # 4: Going Green

As mentioned earlier, aside from the benefits to employee engagement, "paperless payroll" also yields advantages for the environment as well. In addition to the natural resources that don't go into making the actual paper (which by some estimates is 80,000 sheets per year for a small or midsize business), toner, electricity, and gas will also be saved by moving to an automated payroll system. While it is difficult to pinpoint the exact amount of energy to be saved by deploying payroll automation, the savings could be significant considering these expenses are proportionate to your business's growth.

Payroll Software Push # 5: Taxes Are a Nightmare

Though our previously-mentioned benefits of payroll software are convincing, no benefit is quite as compelling to the implementation of this technology as handling taxes. From the UK's National Insurance and PAYE (Pay-As-You-Earn) tax regulations to the United States' strict compliance rules levied through the IRS, taxes are by far the most difficult aspect of the payroll process to manage. As such, a payroll software solution is likely the only option (outside of outsourcing) that can allay tax fears and consistently keep your company out of "hot water". Think taxes are no trouble? Consider these issues:

  • Tax tables (for federal and state taxes) must always be updated
  • Employment taxes have specific timelines attached for depositing
  • Certain wages are not subject to FICA
  • W-2s are error-prone and must be corrected in a specific fashion
  • Penalties can be assessed for incorrect tax withholding, filing, or records retention—and the fines can be steep (up to 100% if involved with federal income tax and Social Security)

Parsing Out the Payroll Software Pluses

The decision to move away from paper-based processes and legacy systems for payroll will undoubtedly cause some members of the payroll team to be reticent to change due to the "comfortability" factor. Keep in mind, that while their attitudes and behaviors need to be managed through the change process like everyone else's, the decision to automate the payroll process is one that is often necessary. Further, as can be seen by the above points, the benefits of this automation extend far beyond just efficiency and wind up touching on points that will increase attraction and retention of employees, as well as mitigate the compliance risks that the company is exposed to. Further, if integrated into an already existing HRMS (Human Resource Management System), compensation, or time/attendance system, the benefits increase exponentially. End

How would you rate this article?   

Implementation Category
 Filed In Categories: Payroll Software
Project Teams Tag
 Tags Tags: Payroll
 Permalink Permalink:
Author  Author: Micah Fairchild
 Share Share:    Bookmark and Share
CRM Deployment



Share This Article



Payroll compliance is a task that is best left to a reliable HR or payroll software solution—particularly if your company happens to house operations in multiple countries."


Related Articles


More Articles By Micah

  • 1
  • 2
  • 3



Follow Us
HR lab
Home   |  HRMS  |  HR Solutions  |  Talent Management  |  Performance Management  |  Channels  |  Resources  |  Blog