4 Dangers on Manual Payroll Processing & Its Solution

Manual payroll processing and its dangers

With the burgeoning growth of information technology, software and apps have now come into scene and pervade all business operations. As a result, payroll manual processing has now become an outdated process in modern business operations.

‘Being outdated is okay’. Held by many, this complacent notion dangerously threatens businesses. Business owners just don’t realise that this archaic method can result in serious consequences. Reduced output efficiency, unnecessary manpower investment, costly government penalties are some of the few drawbacks stemming from ineffective human capital practices. Additionally, due to a lack of control, organisations are highly susceptible to employee fraud cases.

  1. ADMINISTRATIVE

Tons of paperwork. Manual recording of spreadsheets consumes a large proportion of productive time. Moreover, sending regular reminders to employees, managing leave and claim approvals, and frequent reporting of employee updates to superiors can be immensely tedious. Hence, administrative overload is a real issue that organisations increasingly grapple with. That said, the assistance of automated software allows staff to conveniently skip all these. Thus, they can allocate their time in productivity-boosting and revenue-generating activities.

High room of data entry errors. Organic input can often result costly mistakes. Wrong data entry will result in garbage in, garbage out situations. As such, manual recording of employee timesheets can easily create confusion in employee’s over-time records.

Over or under payment of salary. If an employee is entitled for spot bonus on a particular month, there is a chance that HR overlook and fail to amend the salary payout on the following month. Thus, this results in over-payment to employee.

  1. ORGANISATIONAL PROCESS

Tedious keeping of manual records. Book-keeping and document filing can be extremely time consuming, especially where it is necessary to uphold certain protocol. Newcomers will require time to review documentations and adapt to existing protocol.

Not eco-friendly, space consuming. Printing of payslips and paper documents take up considerable storage space. Especially in a land-scarce Singapore, a larger used space means high rental expenses that negatively impacts your company’s bottom-line. In addition, this confers detrimental effects to the environment.

Prone to leaking of salary information. There is a likelihood that misplaced information can fall into the hands of competitors. If confidential client details or company information are involved, the company can potentially suffer great losses.

Lack of security. Via cloud based software, documents are encrypted and  password protected. On the contrary, hard copy documents are accessed and retrieved easily.

  1. TRACKING EMPLOYEE ABSENCE

Lack of visibility. Tons of hard copy records are difficult to duplicate. Therefore, searching for organic employee’s detail upon error is a tedious job. For companies with few branches, it’ll be impossible for the HQ to locate all hard copy documentation in the main branch. Thus, the HQ will lack full visibility of employee time-sheets from other branches, creating obstacles for complete synchronisation of the organisation.

Erroneous recording of time-sheets. Manual recording of time-sheets results in potential losses to the company, especially when individual employees themselves handle it. For certain company will have their employees mark their own over-time schedule, the payroll manager may compute it erroneously into the salary spreadsheet. This results an over compensation of over-time pay, which brings indirect losses to the organisation.

  1. COMPLIANCE ISSUES

Non-compliance of ever changing CPF, MOM laws. Human Resource managers must be continuously updated on any legal changes. This is simply because, a single flaw will result in breach of law. However, how is it possible for a person to stay compliant to all the rules and regulations simply by relying on memory alone?

Prone to hefty penalties and fraud. As long as it happens rather infrequently, companies tend to close an eye to penalties owing to human carelessness. Nevertheless, we have to recognise that carelessness can lead to a fraud case. There used to be an employer who didn’t know that there’s SDL donation for his employees for years. In the end, he became entangled in a fraud case and was required to pay all the donations along with its incurred interest. This is such an utter disaster to a small and medium sized enterprises.

SOLUTION PROVIDED:

After knowing the potential pitfalls of manual HR & payroll processing, you can read the 5 Advantages of Online HR Automation where the benefits of Human Resources Information Software (HRIS) are explained. JuzTalent.com by AYP Group is one of the award winning SaaS (Software as a Service) based software that is widely used by numerous SMEs today. Integrated solutions on employees profilingpayroll processingleave managementclaim management, and scheduling greatly expedite HR processes. In addition, the cloud server safely stores and secures all of the organisation’s information. Thus, an employer can access the database, issue payroll and do any HR tasks anytime, anywhere.

Below is the comparison table for SaaS based and Server based HRIS software for references:

Online (SaaS) Software VS Server Software

 

Courtesy of image: http://www.aol.com/article/2012/11/26/tolerate-a-miserable-job/20386222/

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