Are you processing payroll manually? Here’s what it could be costing you
Posted On April 22, 2019
Manual payroll management may work for small companies in the early stages, however overtime the hidden cost of relying on manual processes can significantly impact your business and productivity.
Many small businesses often overlook the need for adopting technology when starting out. While they may consider implementing a CRM system in the future, they ignore the need for administrative systems. As a result, they do not consider the hidden costs that are associated with carrying out administrative processes manually and it ends up costing them more money and time than they realize.
Let’s talk about payroll management; once you have your compensation philosophy in place, you know exactly how and what you want to pay your employees. Now you would want to define processes in terms of how the salaries would be paid out to employees and who is responsible for processing payroll. Lots of SMEs rely on the HR or Finance team to carry out the process manually or on excel sheets. The common misconception that business owners have is that they are saving time and money by choosing to stick to manual processes instead of investing in an automated payroll solution.
How does this cost your business and impact your productivity?
Human Error: Manually processed payroll includes copious amounts of data entry and calculations that are often ridden with errors. As your company grows, this humble seeming one-person job can turn into a nightmare for the HR personnel. A straight-forward compensation structure might not take up a lot of time, but when it comes to salary advances, reimbursements, commissions and more to be paid out to the employees, you will experience the time spent on payroll processing and risk of miscalculation shoot up. Not only does this lead to frustration among HR team, it also contributes to inefficiency within the workplace.
Security: Employee records and salary data are highly confidential, and it is crucial for the organization to ensure it is stored securely. When you rely on manual processes, you risk the security of this data as they are usually stored on Excel sheets, G-drive or paper-based forms. Data leaks can cripple your organization.
Time Management: Since the HR team must process payroll systems manually, they have to chalk out a significant portion of their time to ensure that the process is carried out smoothly and with no errors (best case scenario). As you scale your business, the HR team will be burdened with carrying out the payroll function manually along with other essential tasks. This ends up costing you more time and money than you planned for with the risk of human error skyrocketing. Essential business functions that require the HR team’s attention are often overlooked since payroll processing will always take priority.
Relying on manual processes to pay salaries and carry out essential administrative functions can cost your business time, money and effort.
How can you save?
I am sure the solution to these challenges is quite evident by now; adopting a cloud-based HR system that automates your payroll processes along with other administrative functions. Before you choose the HR solution, it is recommended that carry out a TCO analysis. Total Cost of ownership is a financial estimate that helps consumers/business owners determine the direct and indirect costs of a product or system. A TCO analysis shows that the price you pay for a solution can be different from its long-term cost.
Research carried out by PwC shows that organizations often underestimate the true expense, the Total Cost of Ownership of processing and managing payroll and other HR administration functions. While it is established that automating your payroll and other HR processes through a cloud-based system can help you save time and money, it is essential for you to conduct research and analysis among potential solution providers to understand which one provides the most value in terms of the long-term cost.
With the above factors in mind, you will be able to optimize the processes that will allow you to save time and money and improve the efficiency of your organization significantly. Keeping all these factors in mind, the Bayzat Benefits payroll module successfully helps SMEs process payroll and pay employees at a click of a button.