Problems with The Traditional Payroll Methods

Payroll Methods

Still using traditional payroll methods? You are certainly not doing your business any favor. Take a look at some of the problems associated with old, dated payroll management methods:

Mistakes – And a Lot of Them

The biggest drawback associated with the use of traditional payroll methods is they are prone to a lot of mistakes. From calculation to sorting, mistakes were made in almost every aspect of the payroll. As all the work was manual, there was a chance of human error as well. This made the entire process lengthy.

A minor mistake has an impact on the income statement that shows the returns and expenditures of an organization. Consequently, tax calculations were also impacted. Also, it was extremely challenging to identify the mistake(s) since there were a lot of records.

Time Consuming

The process certainly consumed a lot of time as there were numerous calculations involved. Firstly, the HR/payroll personnel had to take into account the days and time every member of the workforce worked for. Then, they had to multiple it to their basic pay rate. If they had done overtime, there was a separate calculation for it since companies usually pay higher for extra time put in by employees. Also, deductions and bonuses (if any) were calculated and subtracted or added from/to the salary, respectively.

Other than that, taxes were also calculated. The entire process used to take a look of the time. HR personnel would start preparing payroll a lot earlier than the actual payday.

Extensive Human Resource Requirement

For bigger companies, managing payroll using the traditional methods is not a task that can be handled by a single person. The whole process requires extensive human resources. As a matter of fact, some companies have an entire department that handles this aspect of the business.

If we consider it from a broader perspective, it is still actually a waste of human resource. You can hire experts in other disciplines and avail their services to grow your business instead of providing them with a task such as payroll management that can be tackled easily if you are using online payroll software.

Paper Wastage

Another disadvantage associated with the traditional methods is that their incorporation and use resulted in a lot of paper damage. All the data is recorded in files using the conventional filing system. Individual salary slips were printed, and an extensive paper record is maintained. This leads to a lot of paper wastage.

The newer methods, on the other hand, do not require a lot of paper. Also, files are stored in computers or servers. Therefore, it can be termed as a green way of payroll management.

An Expensive Endeavor

Payroll using the traditional methods can prove to be quite expensive. First of all, you will have to bear the salaries of HR personnel you have hired. And mind you, they do not charge less. Then, all the paperwork and filing systems can eat up your budget.

If you are a small business, it is definitely not a wise decision to spend a lot of merely one task, which can be made automated by using payroll software for accountants. Such systems do not require the services of an experienced payroll manager. Although these programs are paid, they come with yearly subscription plans that are easily manageable. Some payroll software programs such as Netchex offer dynamic pricing as well.

Keeping a Record

Maintaining the record using a traditional payroll system is indeed a tough task. Depending on the size of your organization, you will have to allocate an entire room for this purpose. And when it comes to finding an old record, it will be akin to finding a needle in a haystack since there will be so many old files. Even if you have labeled and sorted them properly, it will still be a challenging task and require a lot of effort and time.

Other than that, there are numerous other issues associated with the traditional filing system.

The Use of Payroll Programs – The Best Solution

The only solution to eliminate the issues of traditional payroll methods is to implement the use of payroll software solutions. The use of such a system offers numerous benefits and conveniences. And as stated above, the pricing is reasonable as well.

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