With the massive growth of information technology, software and apps have now come intoÂ scene and disrupt all business operations. As a result, payroll manual processing has now become an outdated process in modern business operations.
The complacent notion of âbeing outdated is okayâ, as held by many, is dangerously threatening businesses.Â Business owners just donât realize that thisÂ archaic manual payroll method can result in serious consequences, among others the reduced output efficiency, unnecessary manpower investment and costly government penalties. These drawbacks stem from ineffective human capital practices, where in addition, organizations are highly susceptible toÂ employee fraud cases due to a lack of control.
Tons of paperwork.Â Manual recording of spreadsheets consumes a large proportion of productive time. Moreover, sending regular reminders to employees, managing leave and claim approvals, as well as frequent reporting of employee updates to superiors can be immensely monotonous. Hence, organizations are increasingly grappling with administrative overload. That said, the help of automated software allows staffÂ toÂ conveniently skip all these dullness as they can allocate their timeÂ in productivity-boosting and revenue-generating activities.
High room of data entry errors.Â Organic input on manual payroll 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 employeeâs over-time records.
Over or under payment of salary. If an employee is entitled for spot bonus on a particular month,Â there is a chance that the human resources (HR) department overlooks and fails to amend the salary payout on the following month. Thus resulting in over-payment to employee.
- ORGANISATIONAL PROCESS
Tedious keeping of manual records. Book-keeping and document filing on manual payroll system can be extremely time consuming, especially where it is necessary to uphold certain protocol. Newcomers will surely require time to review documentations andÂ adapt to existingÂ protocol.
Not eco-friendly, space consuming.Â Printing of manual payroll slips and paper documentsÂ consume a considerableÂ storage space. Especially in a land-scarce Singapore, a larger used space means high rental expenses that negatively impacts companiesâ bottom-line. In addition, this confers damaging effects to the environment.
Prone to leaking of salary information.Â There is a likelihood that misplaced informationÂ can fall into the hands of competitors. If confidential client details or company information are involved, the company may potentially suffer great losses.
Lack of security.Â Via a cloud based software, documents are encrypted andÂ password protected. On the contrary, hard copy documentsÂ of manual payroll system may be accessed and retrieved easily.
- TRACKING EMPLOYEE ABSENCE
Lack of visibility.Â Tons of hard copy records are difficult to duplicate. Therefore, searching for organic employeeâs detail upon errorÂ requires hard work. For companies with few branches, it would be impossible for the headquarters (HQ) to locate all hard copy documentation in the main branch. Thus, the HQ will lackÂ full visibility of employee time-sheets from other branches, and this creates obstacles for a complete synchronisation of the organisation.
Erroneous recording of time-sheets.Â Manual recording of time-sheetsâas part of the manual payroll systemâresults in potential losses to the company, especially whenÂ individual employees themselves handle it. As certain company will have their employees mark their own over-time schedule, the payroll manager may compute it incorrectly into the salary spreadsheet. This results an over compensation of over-time pay, which carries indirect losses to the organisation.
- COMPLIANCE ISSUES
Non-compliance of ever changing CPF, MOM laws.Â Human Resource managers must be continuously updated on anyÂ legal changes. This is simply because a single flaw will result in a breach of law. However, it is impossible for a person to remain compliant to all the rules and regulations simply by relying on memory alone.
Prone to hefty penalties and fraud.Â As long as it happens rather infrequently,Â companies tend to close an eye to penaltiesÂ due to human carelessness. Nevertheless, we have to recognize that carelessness may lead to a fraud case. There used to be an employer who didnât know that thereâs SDL donation for his employees for years. In the end, heÂ became entangled in a fraud case and was required to pay all the donations along with its incurred interest. This is such a massive disaster to small and medium sized enterprises.
After knowing the potential pitfalls of manual HR & payroll processing, you can read theÂ 5 Advantages of Online HR AutomationÂ where the benefits of Human Resources Information Software (HRIS)