Payroll Management: It's Time to Say 'Bye Bye' to Spreadsheets

Effective payroll management is a crucial ingredient in the success of any business. Failings in this area can lead to serious problems including:

• Non-compliance with tax regulations, which creates financial and reputational risk
• A diminished employee experience if people are paid late or inaccurately
• The time and cost implications of having to go back and correct mistakes

It's important, therefore, to do everything you can to raise efficiency and minimize the risk of errors in your payroll function. This is particularly relevant for businesses that are still relying on spreadsheets and manual data entry to make sure employees are being paid properly.

There are some undeniable limitations to this method and some clear reasons why you should consider making the move to software and a more automated approach.

1. Human error

People are the most valuable asset any company has, and they have a critical role to play in the effective operation of the HR department and your payroll management. However, it's also true that people occasionally make mistakes, and in this crucial area of business, even the slightest inaccuracy can have major repercussions.

When people are working with spreadsheets and inserting large amounts of data into small cells, it's easy for errors to creep in, such as decimal points being put in the wrong place. Furthermore, when this information is closely interrelated and everything needs to be entirely accurate to deliver the correct end result - as is the case with payroll - a mistake in just one cell can affect many other pieces of data.

One of the biggest advantages of using dedicated software for tasks like data entry and management is that it takes human error out of the equation. Automated tools rely on routine, repeatable processes, follow the rules they're given, don't get tired or bored and don't make the sorts of mistakes humans are prone to.

2. Data security

Payroll professionals deal with people's most sensitive and valuable details, including their bank account information and home addresses. It's essential that you're able to keep this data safe, particularly in light of privacy laws that have come into effect in recent years, such as the California Consumer Privacy Act and the EU's General Data Protection Regulation.

Spreadsheets don't offer the level of security you need to feel confident that your employees' information - not to mention that belonging to the company - is safe, even if your documents are password-protected.

Software vendors that specialize in payroll systems will put special measures in place to achieve high levels of security, such as providing regular patches and updates, encrypting sensitive data and storing information on servers with multiple layers of protection.

3. Unification and consistency

If your HR team consists of various people who take responsibility for payroll management in different offices or regions, there's a big risk of discrepancies occurring if these individuals use spreadsheets in different ways.

You can address this problem by introducing a single, unified system that all teams and employees understand and feel comfortable with. This helps to ensure a level of consistency and cohesion in how the department works and how you execute essential payroll tasks each month.

Research has suggested this would be a valuable outcome for most people responsible for doing this crucial job. ADP's Global Payroll Survey 2021 found the majority of respondents (74%) were running multiple systems across various geographies, and as a result, 61% said they received too many payroll queries. Those with a clear global strategy reported less complexity and greater cost optimization.

4. Speed

As well as being prone to errors, manually entering data into spreadsheets is a time-consuming and laborious process. It's not a productive use of people's time and doesn't make the best use of their skills, which could lead to an unfulfilling employee experience and a higher risk of staff turnover.

Handing over routine payroll tasks to an automated system will speed up the entire process, raising efficiency across the department and saving you valuable time.

The people on your team will also have more flexibility to concentrate on engaging, value-generating work that puts their uniquely human skills and experience to better use.

5. Compliance

Spreadsheets are just a tool for human workers to use in whatever way they see fit. They don't provide any kind of guidance, knowledge or protection that could help to minimize risks to your business. Where payroll compliance is concerned, relying on spreadsheets means all the pressure for effective judgment and decision-making falls on your staff.

This isn't the case with software that has been specifically designed for payroll management and offers tools to help you adhere to the latest rules and regulations. A reliable system will help you ensure the right amount of tax is being deducted from employees' pay packets based on where they work and fluctuations in their gross income, for example.

Considering the risks the business could face if you fall short on payroll compliance - from severe financial penalties to long-term damage to your reputation - the benefits of replacing spreadsheets with a modern, agile system could be invaluable.