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Payroll Software: All you need to know before choosing the right fit

payroll software 101

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Payroll Software is essential for Human Resource professionals for the smooth management of employee payroll functions. However, contrary to popular belief, there is more to a payroll software than just the calculation of monthly paychecks. 

The processing and management of payroll operation involves a wide range of capabilities that help an organization to look after its people – a company’s most valuable asset.

The primitive ways to manage payroll include manual calculations or with the help of complex spreadsheets. These systems leave massive room for inaccuracy and are extremely time-consuming at the same time. Using comprehensive payroll software is the only way to correctly look after multiple HR functions. 

These can range from enrolling employees into the organization’s payroll system to maintaining the records till their exit.

tax calculations through payroll software

The need for a software arises when an organization grows and tries to eliminate repetitive tasks. Moreover, manually updating employee information and settling payroll through endless pieces of paperwork is impractical. Nonetheless, manual processes mean that the company is often left with countless compliance issues and errors in calculation.

No matter the size of the company, there is always the need to have a system in place to run basic HR operations. Compromising on this is never a good idea when you are willing to grow as an enterprise. When a company expands, it gets practically impossible to correctly track employee hours and issue payments from time to time.

The Hassles of a Manual Payroll Process

The inevitable extra expenses due to payroll errors costs the organization both in terms of profitability and employee satisfaction. Adding to that, all the wastage of valuable man hours from your HR department means that they are not being able to focus more on employee development. Rather, manual calculations, estimations and monitoring is what takes away almost all of their working hours.

A company’s employees are diverse in terms of seniority levels, roles and responsibilities. This means the payroll is also very diverse. Therefore, there is no single magic formula with which one can properly record and calculate all these different figures manually or by outdated spreadsheets.

life without payroll software

Neglecting on this aspect of the business and not choosing on to invest on a proper payroll software results in a number of hassles. Among them, miscalculating payments, failing to manage complete employee records, missing payroll deadlines, errors in tax calculations, mistakes in classifying employees – these are just a few.

There are numerous factors and responsibilities to keep in mind when processing payroll manually. An employer’s duty is to ensure that people are rightly compensated. However, if you are dedicating all your time in just tracking hours and calculating salaries, all the other important aspects relating to employee welfare gets buried.

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The benefits of Payroll Software

For a growing enterprise, payroll management is an essential part of the business. As a responsible business owner, you have a duty to duly compensate your workers. Errors in payroll and tax calculation, missed deadlines and general mismanagement eventually leads to severe employee dissatisfaction.

Dissatisfaction among employees leads to reduce in overall productivity.

This is where a payroll software comes into play.

You need a framework with which you can understand deduction, track working hours and distribute payments to your workers. A payroll software does all that for you and more. That too – seamlessly.

Timely Payment of Salaries

salary distribution with payroll software

One thing that bothers your employees is not getting salaries on time. Timely payment is needed to keep up the morale of the employees and motivate them. This makes them feel appreciated at the end of the month.

With a payroll software, you don’t need to worry about the timeliness of your salary distribution. The hard work is done by the software itself. A payroll system calculates payments based on pre-set seniority levels and job roles.

Individual bonuses, provident fund, tax and all other such extra calculations are done by the system accurately. With a manual system or by using the complicated excel sheets, you always leave the door open for unwanted mistakes. These mistakes hurt the company profits and eventually result in delaying the payments.

Increased Productivity

When all the payroll tasks are managed by the automated system, your HR department is freed up from the repetitive tasks every month. Imagining the price of the valuable man hours saved! Moreover, employees don’t need to worry about payroll documentations and paperwork anymore as well.

Diverting all the time and energy to tasks that need more care and attention makes your organization more productive over time. Life is beautiful when you have a payroll software to do all the hard work for you.

Cost savings

When it comes to cost savings due to payroll software implementation, the first thing that comes to mind is the savings in paper costs. Then comes the storing and safely maintaining all the data.

The savings in employee working hours is also something that often gets overlooked. Moreover, reduced errors in payroll processing means you are saving there as well.

Implementing a payroll system might seem costly at first. However, once you start to understand the Return on Investment, you know how essential it really is. Payroll software provides one of the best ROI in the shortest span of time.

Error-free compliance records

error free compliance reports

Most organizations often overlook compliance and tend to rely on manual compliance maintenance processes. This is not a wise move as failing to keep accurate compliance records may even result in legal problems.

An all-round payroll software eliminates this threat for good. This is done by ensuring that all the payroll processes comply with existing payroll, tax and other rules of the land.

No duplicate data entry

no duplicate data entry

Duplicate data entry is synonymous to manual or outdated payroll systems. This causes extra hassle for the HR professionals and wastes a lot of time for the employees and the management as well.

Manual systems do not have the capacity nor the functionality to integrate with your accounts. This unnecessary hurdle in the payroll management process kills productivity and hurts the company bottom line.

Live reports on company trends and data

With payroll software, business owners and company management are always updated about certain company metrics and trends. The tracking of employee working hours, measuring expectations and results and monitoring increments and bonuses can be done smoothly on the go.

Apart from these, payroll software ensures that the company run reports easily, file taxes, distribute pay stubs and many more.

The ROI of Payroll Software

The reduction or complete elimination of payroll errors should be convincing enough to justify investing in a good payroll software. Misclassification of employees and mismanagement of data can prove to be very expensive both in the short and long runs. Additionally, there’s also the extra costs incurred due to overpayment and missed tax deadlines resulting in penalties and heavy fines.


Then when you miss payments or underpay your employees, the hassles of getting the motivation back is not just worth it. Digitally storing crucial employee information regarding payroll through a software makes way for an accurate and proactive payroll management system.

Payroll Software integration with HRIS/HRMS

payroll software integration

While looking for the perfect solution for your payroll automation, see if it is compatible with your existing Human Resource Information System. For medium to large enterprises, having an all-encompassing HRIS can be the go to option in this case. With such a system in place, you don’t have to worry about anything regarding your core HR processes – be it your payroll or training. 

For smaller organizations, the right option is to integrate a payroll software with the running HRIS possessing the basic HR automation functionalities. The integration enables seamless understanding among different organizational functions like HR, accounts and so on. When information such as salaries, work-hours, bank account numbers and withholdings update regularly on their own, you don’t need to worry about payroll every other week. 

A manual process for small businesses typically involves HR staff running around between multiple teams to manage payroll processing every month. This is highly impractical in today’s context. Moreover, it’s a very complex, error-prone and time-consuming procedure. 

Smart integrations empower you to access the required information from various teams and store it in a single, secured location.

More factors to consider while buying payroll software
Modern office with modern HR

Apart from easy integration capabilities, you may want to keep an eye on some other important factors while you are out to hunt payroll software. 

  • Ensure that the software is easy to use for everyone involved in the process. Automation is there to make life easier, not to make it more complicated. Therefore, always look for solutions which are easy to understand and train. 
  • Another important reason for which you want to introduce automation in your organization is because you want it to grow overtime. Therefore, your payroll software must be scalable. Scalability of the system will ensure that it will keep up with the increasing tasks as the organization expands. 
  • You need to take the security of your valuable data into account as well. There are many software providers out there offering surprisingly cheap software. However, remember to check the authenticity of the providers before partnering up.
  • Last but not the least, support service is one thing that often gets overlooked at first. Nonetheless, see if your desired solution provider has a good support track record. So that whatever issues may arise down the line, you will know that the experts are always there to solve them.

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Know your requirements

Before anything else, be sure to have a list of requirements of your own. Requirements always differ for different companies and thus, you need to be clear-headed when sitting for the first meeting with your potential solution provider(s). Come up with a list of features that you would want your payroll software to have.

Availability of multiple payment options, multiple currencies, time-off management, insurance, PF integration, profit share provisions and detailed payroll reports can be some of the important factors to be considered apart from the obvious ones.

Based on your requirements, have an estimate of the initial cost of the implementation. You need to look at this cost as an investment for your organization’s secure future.

Setting up a payroll software
"HR Software being used in an office"

Do your research to find the best possible fit for your requirements. Talk with the concerned salespersons and arrange meetings to discuss requirements. Involve the stakeholders from your side and choose the correct fit with all the above mentioned factors in mind. 

If you are still unsure of how to go about the process of setting up the right payroll software for your business, contact us right away. Southtech has more than two decades of experience in automating payroll for industry-leading enterprises. Our experienced team of experts will be more than happy to guide you through your payroll system implementation journey.

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