Advantages & Disadvantages of a Payroll Service
An employer must pay their employees on time and pay them what they deserve. However, if an employer does not know how to manage employee information and their payment system is all messed up, it can damage the company and lose the trust of their employees.
What is Payroll?
Payroll deals with everything regarding the management of employee payments. In a broader sense, the payroll management system is involved in the payment of employees and their taxation, including employee wages calculation, tracking working hours, overtime, any increment or deduction, printing and delivering payslip, and ensuring the delivery of government taxes for employment.
Advantages of Payroll Service
Undoubtedly, there are some benefits of a payroll system or service for which this system is widely used. Here we will briefly discuss those.
· Time-Saving
A computerized system means less paperwork, less calculation, fewer chances of errors or mistakes, and so on, resulting in the system being time-saving.
Even for updating or correcting anything, it takes a lot less time compared to traditional systems.
· Accuracy
Humans are more prone to making mistakes than a computer. With a payroll system, the probability of getting inaccurate results drops drastically.
Because of the accurate results provided in no time, people are modernizing their systems and becoming interested in computerization.
· Effortless Calculation
It might be okay to calculate payments for a few employees, but for bigger organizations with hundreds of employees, it is almost impossible to keep a record of their working hours, wages, increments, deductions, taxes, etc.
In a payroll system, algorithms are created to intergrade all these complicated calculations and give accurate results. In this way, it is a lot effortless and less time-consuming.
· Automated Tasks
You do not need to manually input the information about payments every month. The payroll system makes those tasks automated. You will get calculated results just by clicking a button.
You can also get payslip or other forms with automated information and calculations. All you need to do is print them out if needed.
· Organized Data
In the past, offices used to have rooms full of files and documents of employee records. In case you need any information from there, it is like a whole new adventure to find that particular information among the pile of files.
The payroll system saved us from this hassle as all the data is organized. There is no need to manually search or organize things.
· Easy Pay Slip Generation
Imagine you have to calculate an employee’s records of an entire month, his working hours, wage, shifts, overtime, increments, deduction, etc. After calculating all these, you get his final payment. Now multiply all this work for the hundred other employees of a company.
If manually done, this could be the most difficult task. However, the payroll system saves all this work and generates pay slips of no effort at all.
Disadvantages of Payroll Service
In spite of having a lot of advantages, there are still some disadvantages of payroll service.
· Data Security
Data security is one of the biggest concerns in payroll service. As all employee information is in one place, a breach in data can collect all the information.
With a payroll system, it is not always possible to have access from different places; only one or two computers can have the system. If someone with bad intentions gets access to those computers, there can be severe damages.
· Cyber Security
Breaching is possible for any system, and as payroll system is a one computer system, it is more vulnerable. If someone gets into the system somehow, they might get all the data about that company and might misuse that information.
· Accessibility
Accessibility is low for the payroll system. The company HR is probably the one who can access the system or the Human Resource team members. Otherwise, the system is not accessible by anyone. Moreover, remote access in most cases is denied.
· Cost
A Payroll system can be very expensive. Not all companies can afford this system, especially the smaller ones. Buying or outsourcing a payroll system might take a toll on smaller businesses.
To have a payroll system running, a company might need a certain level of hardware that can be costly as well. Additionally, there could be people who will not understand the system, and you might need to hire someone who understands the payroll system.
To Sum Up
The advantages of a payroll management system outgrow the disadvantages. This is why people are willing to invest in a payroll system despite the cost. A payroll system keeps all the employee records organized and makes tasks a lot easier. Moreover, it saves a lot of time.
