Problems of Running Payroll Manually
Running payroll manually is not only tedious but also presents several problems for the organisation, including a high risk of data loss or corruption, disorganised payroll processing, tendency for errors, and limited capabilities.
1. High risk of data loss or corruption
There is inadequate security, especially for your most private information, if you process your employees’ payroll on a spreadsheet. Any unauthorised access to the spreadsheet could easily result in data loss or corruption.
2. Disorganised payroll processing
The use of spreadsheets to process payroll will result in the quick accumulation of multiple sheets and files as you need different documents for employee information, payroll, leave, claims and other data. In contrast, an automated payroll system will store all your records in one place and the different processes can be seamlessly integrated with one another, saving time and effort.
3. Tendency for errors
Manual payroll processing is an error-prone activity. A single erroneous entry could result in a completely inaccurate record, and finding the source of the error would be a time-consuming and complex process. If the error cannot be found, data would have to be recalculated, wasting more time that could have been used to focus on more strategic tasks otherwise.
4. Limited capabilities
Manual methods of payroll processing have very limited capabilities. For example, leave application has to be tracked via hard copies of forms and annual tax reports have to be prepared way in advance to meet statutory deadlines. Standard reports, such as year-to-date reports, CPF files, bank GIRO files and itemised payslips, cannot be automatically generated with a click of a button.
Spreadsheets require constant monitoring as they are saved in a common office computer. During business emergencies, data on your company system cannot be accessed from your home or any other location without a VPN or cloud payroll solution.
These problems that arise from manual payroll processing could potentially lead to severe negative consequences for the organisation, such as loss of critical data or penalties for non-compliance. By switching from a manual to an automated payroll system, a business can minimise its risk of data loss or corruption, improve payroll processing efficiency, ensure data accuracy with ease, and take advantage of greater capabilities afforded by automation.