What is a Payroll Software?
New to the Payroll scene? A payroll software is a system designed to handle payroll duties and even some of the workload for the Human Resource (HR) function such as leave management and claims processing. Typical payroll duties include payroll calculations, digital payslips, and monthly payroll processing. A payroll software should seek to streamline payroll processes at the same time not sacrificing payroll accuracy or compliance with statutory regulations.
In the current marketing, most payroll software vendors offer cloud-based payroll software solutions. These cloud solutions mean both employees and employers have browser and mobile access, providing convenience on top of accurate payroll management.
What makes a good Payroll Software?
A good payroll software should be able to process complex payroll situations accurately. Payroll software should always be relevant to the HR industry and relevant statutory changes affecting the HR function.
Another essential trait of a good Payroll Software system would be how integrated the software is with stakeholders. Adhering to regulatory compliance, generating useful payroll reports, and meeting tricky deadlines are hallmarks of exceptional Payroll software. In Singapore, HR and Payroll experts work closely with External Statutory stakeholders such as the Ministry of Manpower (MOM), Inland Revenue Authority of Singapore (IRAS), and Central Provident Fund Board (CPF Board), as well as Internal Stakeholders such as the Top Management and various department heads.
Functions of a Payroll Software
There are many functions of a payroll software in today's market. Apart from payroll, the modern-day payroll software is more comprehensive and offers an array of solutions promoting business efficiency.
Payroll
Of course, payroll is the primary function of payroll management software. Basic payroll tasks such as payroll computation, CPF contribution calculation, and payroll compliance are essential steps in a payroll cycle. In essence, payroll software should be able to:
Database: Hold personal details such as bank account details, employee salaries, and other relevant files
Computational: Be able to compute the payroll of every employee accurately, taking into account all forms of variations such as basic salary, overtime payments, odd-payment periods, allowances as per company policies, social security (CPF), and calculation of other mandatory contribution rates. These will include tax calculations, special wage rates, or specified employee payments. The primary function of having payroll software is to reduce manual errors, which may lead to costly mistakes.
Pay disbursement: Salary processing is also integral to the payroll cycle. Most payroll software should be able to offer various payment methods. Some businesses may require multiple payment frequencies or cycles depending on different industries. Nevertheless, the standard requirement would be having a quick payment processing time. For international business, there may be instances that require multi-currency payment. Most companies are mandated to provide employee payslips. Having payroll software will enable the employees to have convenient access to digital payslips.
Compliance: Most cloud payroll software solutions offer seamless integration with compliance needs. This could be in the form of tax calculations or compliance with CPF regulations. A list of Auto-Inclusion Scheme (AIS) payroll software vendors can be found on the IRAS website. This list evaluates software based on its compliance and controls and categorizes software based on the forms it supports (IR8A, IR8S, A8A, A8BB).
Internal Reporting: A key function of payroll software is its reporting capabilities. With the development of artificial intelligence, software is getting smarter in meeting firms with a strong demand for analytical reporting. Depending on business requirements, software that offers report customization and useful infographics may add value to a company, often aiding top management in making critical business decisions.
Leave Management System
Slight deviation from monthly payroll activities, certain payroll software offer leave management system as a bundled function or an add-on module. Some software providers charge users based on modular requirements, thus offering competitive and flexible solutions. An integrated leave management system facilitates the leave application process. It helps with the computation of leave-related payrolls, such as leave buy-backs.
Claims Management
An HR department in some companies may oversee the processing of specific claims. Some payroll vendors offer this as a solution to streamline claim processing and approval. A company's employees may use such cloud-based systems for convenient claim processing. Considering that manual claim processing takes up valuable time, such a module is targeted to offload some of the routine tasks performed by the HR function.
Timesheet and Attendance Management
Timesheet and attendance management can be tedious tasks to execute. Such requirements are usually more prevalent in the manufacturing or project-based industry, with some firms having huge and complicated requirements. Thankfully, there is software that seeks to simplify these complex processes. Note that not all payroll software has a timesheet and attendance management function.
Who should be using payroll software?
From our perspective, most companies should adopt an online payroll solution. To a certain extent, some companies do need it more than others due to their unique requirement and nature of business. We will highlight four key types of companies that should consider investing in payroll management software.
Payroll Software for small businesses
Small business? Why? Small companies with not-so-complex employee payroll processing may have a straightforward payroll process. However, due to its scale, employing a trained payroll accountant for payroll duties is not economical. Industry practices for small businesses include subscribing to payroll software and using the software's computational and compliance prowess as a ringfence. Most companies will further engage a payroll service provider to ensure full compliance with necessary employment regulations. For companies with less than 10 headcounts, a monthly fee of engaging a professional payroll service provider alongside payroll software could be less than 10% of the cost of hiring a payroll executive.
Payroll Software for Group / Multiple Companies
Managing multiple companies is challenging. For situations such as having a group of companies, be it a F&B empire or complimenting businesses, payroll software that is universally implemented across your companies could be a good way to reduce costly errors and ensure key payroll deadlines are met (disbursement, reporting, and compliance). Online payroll solutions can also streamline your administrative processes, such as leave management and claims processing, which will likely free up precious time amongst the various companies. If reports and analysis are required for multiple entities, such software may incorporate some form of business intelligence to generate customized and meaningful reports for management's usage.
Payroll Software for Complex Payroll Computations
Payroll software is sometimes adopted for complex payroll situations. Firms with multiple worker types, fluctuating wage rates, or other complex rules affecting individual employees' monthly pay packages should consider using software to reduce human errors.
Payroll Software for International Companies
Multicountry payroll solutions are becoming popular for countries with a presence in more than one country. International payments involving multi-currency payments can be challenging for payroll accountants, especially if their expertise is confined to a particular geographical location. Some online Payroll solutions support international payroll platforms, but having software without the right reviewer is one of the many payroll challenges international companies may face. Increasingly, more companies are exploring having a Multi-country payroll outsourcing firm with a presence in their locations. Most of the time, these cross-border payroll service providers will have an experienced payroll team to support multicountry payroll solutions.
Payroll Service Providers - An Alternative Solution
If payroll software is the tool, Payroll Service Providers are your carpenters. Companies large enough to have in-house payroll accountants will likely not consider this as an alternative solution unless cost is a factor. However, payroll software may seem too "foreign" for smaller firms as operating these "tools" require specific knowledge and skillset.
Hence, payroll service providers offer competitive solutions that provide companies with both software and technical expertise in payroll. Supported by an experienced payroll team and usually a reputable cloud payroll software, most payroll service providers offer clients comprehensive payroll and HR solutions. In a separate article, we had explored the advantages of engaging payroll service providers in Singapore and how their services can complement your business.
Should I invest in payroll software?
A question for entrepreneurs and business owners to ponder. Whether a company should invest in a payroll software ultimately boils down to the firm's needs. Payroll software may bring many benefits, such as accuracy, compliance, efficiency, and reporting capabilities. It is wise for the company to evaluate if payroll software is required before committing to a decision. Do note that the tools are only as good as their users, so a company would also need to factor in their existing employees' skills and technical knowledge. Otherwise, engaging a payroll service provider could be the next best alternative.
At OakTree Accounting and Corporate Solutions, we offer payroll solutions for local companies as well as firms with presence in Malaysia. All payroll solutions are backed by credible payroll software to ensure accuracy, compliance and fuss-free integration. If you are exploring to streamline your payroll processes, do feel free to reach out to us for an obligation-free discussion!
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DISCLAIMER: The views and opinions expressed in this article are those of the author and do not necessarily represent the views and opinions of any individuals or organizations with which the author may be affiliated, either in a professional or personal capacity, unless explicitly stated.
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