Most companies realize the need to switch from manual payroll processing to an HR software (Click here for more info) pretty late. When it’s an absolute mess and they need to tidy up the whole thing… So let’s see when is the time right to adopt an HR payroll software.

A scenario

ABC Pvt. Ltd. Is a unique start-up. It’s an aggregator for various furniture brands and carpenters to advertise and showcase their works along with quotations. Consumers can choose what they need and from whom they need it. Carpenters can also bid for bigger or bespoke projects.

Till date since its inception in 2015, ABC Pvt. Ltd. was very particular and finicky about hiring employees in huge numbers. They recently got VC funds and have decided to hire marketing experts and strategic advisors. 

Their employee count is now set to increase from 20 to 50+ within the next six months. Their payroll executive, who also doubled up as their financial accountant has his hands full already. They envisage that they’ll either need to hire one or more full-time payroll execs for processing payroll, which includes all statutory filings and remittances too. 

One of their employees suggests that the time is right and ripe for them to evaluate a few HR and payroll software, which also includes attendance management software. He also suggests that they should decide early enough whether to go for an in-house software or to outsource their end-to-end payroll management to a CA.

What do you think? 

Here are a few questions for you to ponder on:

Was this the right time to go for an HR software?

Shouldn’t they just hire one or two payroll execs for this task and mind their core business?
Shouldn’t they put their newly received funds to overcome other challenges?
Shouldn’t they try out payroll outsourcing before purchasing an HR software for in-house use?

Here’s what we think…

Was this the right time to go for an HR software?

Yes, definitely. Once you hit 20+ employee count in India, it becomes mandatory for you to comply with statutory compliances, such as PF, ESI, etc. Manual payroll process is a time-consuming task anyway but the effort you put in multiplies after you’ve introduced salary components, such as PF and ESI. Filing TDSes and PF remittances correctly is a time-consuming process. Add to this, the chaos you’ll generally have regarding updating leave approvals, calculating balances and deducting Loss of Pays (LOPs) from monthly salaries of employees. 

Also, you have to distribute payslips to your employees. Spreadsheets are a sure killjoy when it comes to all such activities where you must copy-paste figures and other data from it to another application! Leave-related emails, approvals and follow-ups take a lot of time. Calculating leave balances for all employees before processing payroll is a mammoth task.

An HR software will eliminate all such routine tasks, which over time, can get chaotic and ad hoc. A good HR and payroll software will let employees and their managers handle leave requests and approvals with near-zero HR intervention. All leave balances will be automatically updated in the system and LOP-related information will be seamlessly integrated with the payroll module.

Statutory compliances will be auto-updated in the system from the time the authorities make it mandatory for all companies to follow. Also, you’ll get outputs such as Form 16, PF files, Form 24Q, etc., in a ready-to-use/upload formats from the system. 

Salary structures and components put in place once will be used as auto inputs to payroll processing and you can process payroll for all employees by using a checklist wizard of sorts. If you’re confident enough, you can also go for one-click payroll process. Payroll reconciliation tools will help you compare payroll for current and previous months so that you can review and correct any details, if required.

It’s easy to migrate and start afresh with a new HR and payroll software when you’re small and growing organization.

Shouldn’t they just hire one or two payroll execs for this task and mind their core business?

They can always hire one or two payroll execs for this task but all the time-consuming and errors mentioned previously will still arise. 

However, if they purchase an HR and payroll software (Click Here), their current accountant alone can easily manage payroll for the growing company along with his other tasks. Also, if they purchase an HR and payroll software on the cloud, they can subscribe for a monthly, half-yearly or annual plan. They can easily afford plans that start at the rate of just INR 10 per employee per month. 

They don’t need any upfront investment or IT team to take care of this application. No servers needed on premises!

With the expenditure and salaries that they save on hiring two people, this is a very cost-effective decision. Also, the system will ensure that all leave, attendance and payroll modules are seamlessly integrated with one another while the Core HR module will make sure that they capture all required employee data in one central location. 

This decision will provide them with direct cost savings on overheads, data error relates losses, zero fines and penalties due to completely accurate and on-time statutory filings and remittances made possible due to the software.

Shouldn’t they put their newly received funds to overcome other challenges?

Human Resources are the most important asset of any organization. Finding the right talent is not enough in this dynamic and competitive world, retaining them is the key. 

Getting a cloud-based HR and payroll software will help them up their employees’ morale. Via the Employee Self-Service (ESS) portal, which can also be accessed as a mobile app, employees can directly update and upload their official information along with submitting tax declarations and plans, leave requests, etc.

Employees can view employee directory, payslips and income tax statements. They can view HR forms and policies in real-time and access official communication sent via mass mails/ SMSes.

Employees can interact with one another via Social Feeds similar to other social networking sites. 

Retaining the right talent is one of the keys to success. Employees will not face frustration over multiple follow-up emails for leave, incorrect LOP calculations, incorrect taxes deducted, etc. All their basic transactions and queries will be taken care of. Via the mobile app itself, employees can use the Help Desk feature to log trouble tickets for quicker and faster resolution of their concerns.

Having a cloud-based HR and payroll software is not a luxury anymore to retain right talent. It’s the most basic requirement. This decision will leave their senior management free from bothering about core HR and payroll tasks and enable them to focus on their core competencies and business requirements.

Shouldn’t they try out payroll outsourcing before purchasing an HR software for in-house use?

They can outsource payroll to a CA but the costs are definitely higher than having a cloud-based HR and payroll software. The CA will have other clients as well and will not give you 100 percent attention.

The CA will hire one or two payroll execs to carry out this payroll side of his/ her business. Accuracy of ABC Pvt. Ltd.’s payroll depends on how good are the payroll execs, hired by the CA, at their work!

Most CAs still use spreadsheets and manually process payroll, which makes them prone to human and clerical errors. They’ll need to create payslips manually for each employee and email them to each employee individually.

ABC company’s employees will still need to worry about attendance related matters and LOP-related concerns. 

ABC company may not have access to their own payroll data anytime they need. Getting MIS and statutory reports are all dependent on the CA’s capability.

However, ABC company can look at outsourcing payroll (and other tasks such as leave and attendance management) to a CA provided he/she is using an HR and payroll software on the cloud. The CA can then lend his/her domain expertise and provide ABC company with all services they need in an accurate manner but yeah, this will definitely be a costlier affair.

What do you think?

What are your thoughts on this? What would you do if you were at the helm of affairs at ABC Pvt. Ltd.? Will you opt for a comprehensive cloud-based HR and payroll software like greytHR?

Let us know your views. We would love to hear from you.