Functions of Payroll Management Software

functions-of-payroll-management-software

Payroll management is one of the most important but also the most difficult business operations. Every company seeks to run its operations as efficiently as possible. However, mistakes can happen, and they can have serious consequences.

Because SMEs have fewer employees than major corporations, they are more likely to conduct payroll using spreadsheets or outsource it to a professional. These payroll management systems are highly prone to errors.❌

Employee morale and performance may be hampered if payroll management systems are erroneous.☹️ While accuracy and reliability are essential, legislative compliance is also necessary. Businesses must have a greater grasp of the entire payroll process, as well as why payroll automation is necessary in order to ensure compliance and employee engagement

What Is Payroll Management In HR?

In a word, payroll management entails a company’s administration and implementation of payroll functions i.e. to record employee information and manage payments, as well as track hours, manage leave, incentives, and deductions, among other payroll administration responsibilities.✅

Complying with statutory provisions for employee payments, such as income tax, is also part of the procedure. Setting up a procedure and system to address employee grievances is also part of the payroll management process.

Process Of Payroll Management

payroll-management-process
Payroll Management Process

Pre-Payroll Process

➡️ Mapping Out Payroll Policies:

The final amount paid to each employee is determined by several parameters. When it comes to compensation, the company’s various policies enter the picture. For starters, these policies must be established and authorized by the management to ensure that payroll processes and administration are systematic. ✅

The following are the main company policies that are taken into account when processing payroll:👇

  • Time & Attendance Policy
  • Employee Compensation Policy
  • Leave and Benefits Policy
  • Reimbursement Policy
➡️ Collecting Information:

Communicating with various departments and employees to acquire important information is key to the payroll management process. The challenge of collecting data in multinational corporations and large organizations can be daunting. ☹️

In a small business, however, inputs come from a single source or fewer teams.

Using smart payroll software with integrated features such as leave and attendance management and an employee self-service portal ensures that the data collection process does not become an issue. If payroll is to be processed, you must address this information first:👇

  • Remuneration Structure for New Joiners
  • Salary Modifications 
  • Flexible Payouts
  • Attendance Information such as paid days for the month, overtime, shift allowances and leave encashments, etc. 
  • Ad hoc deductions, such as EMIs, or recoveries, such as ID card replacements or clearing recoveries
  • Employee Investment Declarations
  • Expense Reimbursement Bills
  •  Old and New Tax Regimes
  • Relieving Details 
  • Previous Employee Income/Tax Declaration
➡️ Validating Information:

After the data is acquired, it’s time to check for compliance with corporate policies by validating investment declaration bills and reimbursement proofs, as well as variable payout data.

The most important thing is to ensure that you include all new hires in the payroll cycle, that previous employment wage declarations are taken into account, and that CTC break-up is done according to corporate standards. Before completing the payroll, ensure that any employees who will be relieved during the payroll cycle are addressed.✅

Payroll Process

➡️ Payroll Calculations:

This is the real deal!😍

When most people hear the word payroll, the first thing that comes to mind is financial calculations. So the obtained and approved input data is fed into the payroll management system for actual payment processing at this point.

The salary is calculated once all of the components have been evaluated, including EPF, ESI, LWF, PT, Statutory Bonuses, Statutory Bindings, and applicable taxes. With modified taxes and other deductions, the ultimate outcome is the In-hand salary.

To avoid errors, it’s usually a good idea to reconcile the figures and double-check the data before processing payroll. ✅

Post-Payroll Process

➡️ Maintaining Payroll Data: 

This is the most important step in managing and validating the actual monthly payout, which includes a precise record of employee paychecks, withholdings, and tax information, as well as matching accounting records in the ledger. Payroll software guarantees that you avoid piles of documentation when filing periodic tax deposits and tax forms, avoiding fines and legal issues in the process.

➡️ Salary Payouts:  

It’s that time of the month again!😍

It’s time to put a smile on the faces of your employees with a salary credit in their accounts. 😇 Employees are usually given a salary bank account, and employers prefer money transfers.

You can, however, pay your compensation in cash or in installments. Once the payroll process is finished, all that’s left is to make sure the company’s bank account has enough money to pay the salaries.

A salary bank advice statement is then delivered to the concerned branch with information such as the employee’s name and ID, bank account number, wages, and  PF information. If you’re tech competent and use payroll software with an ESS portal, you can just upload the pay slips and have your staff log into their profiles and view them at any time and from any location.

➡️ Statutory Compliance:

The company disburses the cash to the government after deducting all required taxes such as EPF, TDS, ESI, LWF, and PT while processing payroll. After all, dues have been paid quarterly, half-yearly, and annual returns/reports are prepared and filed to the concerned government agencies. 

➡️ Payroll Accounting:

The payroll process would not be complete without keeping track of all financial activities. Employee salaries are one of the most important operating expenses that must reflect in the records. ✅ As part of the payroll management process, it is critical to keep an eye on the financial records and verify that all salary and reimbursement data is input appropriately into the accounting/ERP system.

➡️ Creating Insightful Reports:

In-depth reports are generated and kept to make informed choices and estimate the firm’s future.💡 As a result, after freezing and running payroll for a month, reports such as department- and location-specific employee costs are examined to prepare for the following month and sent to finance and senior management executives.

Payroll professionals are more responsible for digging into the statistics, extracting essential information, and sharing similar reports monthly, quarterly, half-yearly, and annual. They must maintain track of liabilities such as leave encashments, gratuity liabilities, and bonus liabilities and account for them in the organization’s long-term strategy.✅

Challenges In Handling Payroll Management Process

When it comes to paying their employees, companies all over the world must adhere to a legislative structure. There are four parts to this structure.

1️⃣ Keeping Up With Compliance

If not done correctly, the practice of being compliant can be complicated and costly. 

compliance-in-payroll-management
Compliance In Payroll Management

The computations are based on each employee’s paycheck information. Furthermore, businesses must report such estimates to the government on a regular basis.

Most firms work on compliance using spreadsheets and other manual methods, which is not the most effective approach to stay compliant. The calculations are laborious, time-consuming, and erroneous.

And laws change all the time!

2️⃣ Spreadsheet Complications

According to a report, almost 57 percent of Indian firms still manage and process payroll using paper or spreadsheets.

  • Although there are no upfront costs for manual setup, computations using spreadsheets or any other manual approach are tedious and time-taking.
  • Spreadsheets can be useful in various situations. However, as the number of employees grows, so does the number of spreadsheets.
  • This process is being worked on by different teams, all of whom have accessibility to the spreadsheets. Any misused data can have a negative impact on the business.
  • Spreadsheets lack the features required to be compliant with tax regulations on a monthly basis.

3️⃣ Data Security 

Employees are expected to give a significant amount of personal information in the form of official documents to the HR department for payroll management. Employee bank account information, rental agreements, and other personal info are among them.

Employee data can be compromised, and failing to protect it can severely harm a company’s reputation. Paper-based files can be readily lost. Even if the information is stored in spreadsheets, it can be hacked with just a passcode.

4️⃣ Lack Of Flexibility

Employees approach the payroll department on a regular basis to get their information updated. The staff keeps rental agreements, bank account information, and other important papers updated on a regular basis to ensure that the process operates smoothly.

Multiple update submissions demand a significant amount of time and effort on the part of the parties involved. If these records aren’t updated, salaries may be credited incorrectly. It’s possible that employees will fail to submit data on time. This effectively blocks the entire operation.

What Is Payroll Management Software?

Payroll Management Software is an automated solution for calculation and processing of employee payments, generating tax forms, and facilitating administration. Being software it reduces the chances of mistakes caused by human error and can also be rolled into comparatively large HRMS, EPR, or any accounting software.

HRMS payroll is designed to manage and streamline the process of paying employees by making payroll much easier and more time-efficient.🚀 

The benefits of payroll management software are discussed below:👇

Benefits Of Effective Payroll Management Software

Your employees will benefit from the Payroll management process since it provides them with structure and regularity. It also provides them with a specific grievance redress channel. A strong Payroll Management system can assist a company in the following areas:👇

benefits-of-payroll-software
Benefits Of Payroll Software

1️⃣ Improve The Morale Of Employees

If your employees experience job insecurity and they’re not paid on time, they may begin to hunt for a new job. A Payroll Management system will take care of any last-minute difficulties or manual inaccuracies, ensuring that your employees’ morale remains high.😇

2️⃣ Lower Tax Bills

You can end up having to pay penalties for unmanaged records. Taxes and TDS must be deducted from the paycheck, and all of this must be done accurately. In this regard, Payroll Management software can assist you and help you avoid legal penalties.

3️⃣ It Helps Even New Startup Owners

If you’re a new startup founder, you’ll have to wear many hats in the beginning. One of them is being in charge of the payroll. Rather than doing it manually and making human errors, you can now maintain your company’s finances with payroll management software.✅

4️⃣ It Can Reduce Overhead Costs

Rather than paying somebody else to do your payroll, do it yourself and save a great deal of money. This way, you’ll have more control over your company finances!😉

Functions of Payroll Management Software

Here are some of the functions that a good payroll management system has:👇

1️⃣ Compensation Structuring

HR Payroll software streamlines the salary structure of employees and manages their salary directly by automating the tasks. It’s obvious that employees don’t appreciate paycheck errors or delayed salary processing hence HRMS payroll verifies several details like salary and hourly rates, their regular and overtime hours, bonuses,  and other information that goes into employee’s compensation.

2️⃣ Compliances and Taxes

Payroll Software allows you to manage the tax and legislative compliances according to the new changes and updates that are given by the government as failing to pay payroll taxes is usually a costly mistake. Hence Payroll Processing Software along with cloud Payroll completes various forms while documenting payroll taxes and keeps all factors in the account for determining tax deductions and satisfying different tax rates of different regions.

3️⃣ Employee Loans

In every organization, giving loans to trusted employees if required is a common practice. But sometimes in big companies, it gets difficult to maintain multiple records and update them simultaneously. Automated Payroll facilitates configuring and authorizing employee loans as per dynamic workflow. It also incorporates loans on an EMI basis.

4️⃣ Expense Management

Expense management is a very crucial task in an organization. It’s the function on which the balance of the organization depends. Online Payroll software tracks and manages the real-time checks on expense claims filed by the employees and keeps a check on unwanted expenditure. Employees can file claims according to their convenience and gives them access to the softcopy of receipts, thereby enhancing transparency in the organization.

5️⃣ Flexi-Pay

As employees are the assets of the organization, their satisfaction is also of utmost importance. Many organizations provide Flexi benefits to their employees as a part of compensation. Payroll Processing system software has a Flexi-Pay feature that keeps track of the expenses along with the benefits that are given to the employees. It also manages the reimbursements for distribution without any kind of dependence on maintaining spreadsheets.

6️⃣ Payroll Integration

The integration feature of the Payroll Management System saves a lot of time and provides the utmost security by preventing any sort of data-stealing without any need for manual data entry. It decreases the risk of errors to a great extent. It syncs the data which is shared between HRMS and payroll with one another automatically. HRMS Payroll is the best solution for all your payroll and accounting needs.

7️⃣ Pay Slips and Reports

Automated Payroll software is capable of generating reports like leave summaries, salary statements, and salary benefits. It has a tailor-made approach that manages and customizes reports with the company’s pay slip templates. Online payroll software is capable of printing pay slips and downloading regulatory payroll forms.

Essential Features of Payroll Management Software

Here are some of the main characteristics to look for in robust Payroll Management Software when purchasing one for your company’s needs:👇

features-of-payroll-software
Features Of Payroll Software
  • Payrolls should be generated automatically.
  • It should create accurate and timely invoices.
  • It should come in handy when filling out tax paperwork.
  • It must include basic tax reporting tools.
  • It should be easy to integrate with the rest of the company’s software.
  • It should make compliance easier.

Conclusion

Payroll processing, as previously noted, is critical for organisations, and so is payroll software. They are essential for staying organized in today’s fast-paced environment, which frequently comprises many employees, non-traditional work techniques, and tech-centric workflows. Most businesses have the same purpose, but their feature sets and size differ. Analyzing your company’s demands will help you determine the ideal payroll system for you. 🚀

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