Do you track payroll using manual payroll and traditional ways? It consumes much time and resources compared to smart ways of online HRMS software. Online human resource management system provides multiple benefits for companies, including effortless and accurate payroll management. The blog covers detailed insights into manual & automated payroll processing, enabling decision-makers to have a wider approach for both types.

Comparison between Manual Payroll & Automated Payroll Processing

There are major differences between manual payroll & automated payroll processing where companies experience significant inputs in terms of productivity, accuracy, and efficiency. 

What is Manual Payroll?

Manual or paper payroll is a traditional way of managing payroll for all employees without using any cloud-based payroll app. The process includes multiple verifications to ensure the calculations are done with accuracy, leaving no stone unturned in providing accurate remuneration to employees. Further, the process only involves using spreadsheets like Microsoft Excel and other accounting software to have accurate calculations of payroll. 

Advantages of Manual/ Traditional Payroll Processing

Here are the significant advantages of leveraging the traditional or manual payroll methods-

1. It is beneficial for SMEs and early-age startups that have a smaller employee size, where there is no need for automated software or installing specific computer systems is not required. 

2. Staff can easily manage the overall payroll for the workforce and can modify the process according to their workflow. For instance, a factory operating in a rural area would find traditional payroll processing more beneficial as compared to automated payroll processing. 

Disadvantages of Manual Payroll Processing

The traditional way is outdated and companies that leverage it find the following drawbacks in the long term-

1. It requires investment in human resources to manage the workforce payroll to ensure no errors happen in payroll processing. Further, it affects the company’s budget which has a bare minimum budget allocated to managing HR activities. 

2. Further, there are high chances of errors and mistakes in calculating employees’ monthly payroll, considering all factors like employee leave balance, attendance, etc. It later causes conflicts and reduced employee satisfaction with the company. 

3. Compared to the smart payroll management system, it becomes much more challenging and time-consuming to calculate payroll for all employees. The time required in processing payroll, making necessary rectifications, cross-checking details, and complying with rules & regulations become hectic, stressful, and time-consuming.

4. Further, data maintenance with traditional processes is not secure as compared to advanced software. There are high possibility of data being lost or compromised due to human errors/ inadequate backup systems. 

What is Advanced Payroll Processing?

Advanced payroll processing means generating payroll using a smart employee payroll management system. The process includes automation and simplification in all HR operations, including monitoring employee leave balance, time, attendance, daily work reports, and accordingly calculating payroll with no errors or mistakes. Further, with employee self-service systems, employees can easily generate their payroll for specific months where HR intervention is not required. 

Advantages of Advanced Payroll Processing

Here are the below-mentioned factors that make performance management system worth investing in. 

1. Online HR management software provides a complete dashboard that allows HR personnel to manage payroll for all employees of the company. It simplifies the process where no manual work is required. 

2. HR managers can easily monitor employees’ work hours, shift completed, leave balance and accordingly generate payslips in no time. It leads to accuracy and efficiency. 

3. Leveraging a cloud-based payroll app, like Kasturi HR saves time for management, making them invest their time in strategic tasks. 

4. Employees can easily generate payslips for previous months in real-time, where they need not connect with HR personnel individually. 

5. Data remains secured with advanced and cloud-based online HR software, where no further investment is required to secure employee data. 

6. Admin, managers, and employees can work together to evaluate employee performance which becomes helpful during appraisal months. 

Disadvantages of Advanced Payroll Processing

There are a few drawbacks associated with smart employee appraisal management software which are as follows-

1. Small organizations might find online HR management software/ tools costly that do not align with their allocated budget, leaving them left behind in leveraging their potential. 

2. It requires much time and effort to educate employees about the features and steps of using smart HRMS software, consuming much time in the initial phase. 

3. Some HRMS tools provide premium features in a variety of pricing models that make it challenging for SMEs to invest in. 

When You Should Use Traditional or Manual Payroll Processing?

Here are a few conditions when using traditional ways of managing payroll works effectively-

1. Organizations with a smaller workforce size find it effective to use manual payroll processing with paperwork and spreadsheets, as they need not maintain details for a vast employee base. 

2. Companies with tight budget allocations of HR departments use manual processing to save costs. 

3. If the office is located in a location where internet accessibility is bare minimum, for instance, in backward or rural areas, using manual processing is effective. 

When You Should Use Advanced Payroll Processing?

Leveraging a smart online HRMS or employee appraisal management software is effective in the following situations-

1. It is applicable to all organizations, including SMEs, early-age startups, and well-established companies, depending on their requirements. For instance, some companies require automatic payroll processing while some require time & attendance management.

2. Companies facing regular errors in payrolls and conflicts among the workforce can switch to advanced payroll tools from manual payroll processing. It enables accuracy and transparency. 

3. Smart tools can be operated from multiple locations that companies with several office locations can leverage for effective data monitoring. 

4. To reduce HR intervention in administrative tasks, smart human resource management tools are helpful. 

5. To simplify onboarding, offboarding, and overall employee life cycle management, a smart cloud-based payroll app is effective. 

Ending Note

Manual payroll processing is outdated and a thing of the past. Smart HRMS tools have revolutionized the way HR operations have been done. What you can achieve with traditional payroll processing and easily be achieved through smart HR management tools. If you’re looking to integrate a smart HRMS solution, prefer Kasturi HR. It offers one-stop-solution to all your HR needs.