The problems associated with outsourced payroll solutions and the manual processing of payroll has today made the introduction of digital payroll a no-brainer decision for all businesses, irrespective of size.
Manual processing of payroll is inefficient, time wasting, error prone, and becomes more ineffective as the business expands.
While many have ditched manual processing for outsourced payroll solutions, the latter also comes with its own unique problems. Companies that outsource their payroll lose control over their payroll management, expose the data of their employees to a third party, and have to bear the burden of any errors made by the outsourced payroll provider.
Consequently, many companies continue to face challenges in their payroll management.
Compliance with statutory regulations, outdated technology, inflexibility, shortage of payroll professionals, challenges in handling leave management, and challenges in handling remote workers, absence of automation, data insecurity, and inconsistent policies are some of the payroll challenges, according to Zimyo, an employee experience platform.
To solve these problems, the clearest action businesses can take is to move away from manual processing and outsourcing to the use of digital payroll solutions.
In this article, we will highlight 24 benefits of digital payroll for both owners and employees as a way to show its superiority over manual processing and outsourced payroll services providers.
We will thus consider this in two parts:
- Benefits of digital payroll for business owners
- Benefits of digital payroll for employees
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Benefits of digital payroll for business owners
Let’s begin by considering the benefits of digital payroll for business owners:
1. Cost effectiveness
Manual processing of payroll requires the employment of staff that will handle the payroll systems and the setting up of office spaces for them. As a business grows, the number of staff required grows. Consequently, the more a business expands, the higher the cost of sustaining a manual processing of payroll.
Similarly, when a company outsources, they have to pay expensive monthly retainers to the outsourced payroll solutions provider. This is necessary since these providers need to generate enough revenue to offset their overheads – including items that are not directly relevant to the service the business outsourcing payroll will receive (e.g, rent).
In contrast, integrating payroll software is cheaper than the salary of staff or the monthly retainer of an outsourced payroll solutions provider. Moreover, businesses can easily grow with their digital payroll software, which means they will incur little to no extra cost if the number of employees increase.
For example, with NOW Money, employers will only pay AED0.50 for every salary information file (SIF) they upload to the payroll software (also available as a mobile app), irrespective of the number of employees on the list.
2. Time efficiency
Similarly, manual processing can be time consuming. And while outsourcing reduces the time investment needed to do actual payroll work, it also requires time to coordinate with the third-party to ensure they are doing things according to the company’s preferences.
Digital payroll systems, on the other hand, streamline and automate the payroll process so it can be carried out in no time. This means employees can receive their remuneration quickly and the employer can spend less time with payroll and more time on other business processes.
3. Allows employers to have control over their payroll management
While outsourcing to a payroll provider with good technology can be better than manual processing, it can also lead to the loss of control over one’s payroll management system.
However, payroll management is very sensitive since it directly concerns the very engine of every organisation – its human resources.
Beyond that, key stakeholders also include the government (because of tax reasons) and the accounting department (because payroll cost is a cash outflow). Therefore, losing control over such a sensitive system could be bad for a company, especially when something horribly goes wrong.
The digital transformation of payroll makes this outsourcing unnecessary.
Businesses can have their own payroll software and deploy it in-house, exercising control over their own payroll process once and for all.
4. Enhances compliance with regulations
A report by Deloitte has shown that legislative compliance is one of the primary challenges of payroll systems across the globe. With digital payroll, employers can solve this problem.
While it is difficult for some payroll staff to keep tabs of relevant changes in legislation, payroll software can be automated to update when regulations change. Suppliers of payroll or HR software are always churning out updates to take care of software improvements, as well as relevant legislative changes.
Regarding compliance with regulations in the UAE, NOW Money doubles as a wage protection system (WPS) agent. Consequently, users of the digital payroll solution will be the first to know when there are relevant changes in WPS rules.
5. Flexible payroll management
Another advantage that results from the control that digital payroll solutions provide for employers is that they can easily come up with initiatives to tweak their payroll policies in a bid to better reward employees.
6. Improved reporting
The automation of payroll processing made possible with digital transformation also leads to better or improved reporting. As everything is digital, real-time reports can also be digitally created and analysed.
With manual processing, reporting will be inadequate and manually generated. And with outsourcing, there is a need for back and forth consultation with the outsourced payroll provider.
Digital payroll makes it easy to generate and analyse reports so employers can understand the efficiency of their current payroll policies and process and seek improvements where necessary.
One area where this is relevant is cash flow management. Reports about payroll cost can help the accounting/finance department better manage cash flow and prevent default in salary payments.
7. Data security
Another resulting advantage of companies having control over their own payroll management system is the added security of employees’ and other company’s data.
If improperly managed, payroll data can be hacked and hackers can cause various kinds of damages. Moreover, nefarious activities by the staff of the outsourced payroll provider can also expose employees’ data. And if such breaches happen, it is the company that the employees will hold responsible, since they don’t have direct access to the third party.
Therefore, companies are better served controlling their own employees’ data. Moreover, they can choose payroll software with adequate data security to significantly reduce the risk of any data breach.
Apart from the data security provided on the NOW Money software, there is also a user authorisation system that ensures that only those the head of human resources or the payroll function has given access (by creating login information for them) can use the platform. Furthermore, the head of payroll or human resources can delineate the specific tasks that each user can execute, making it impossible for them to access data they are not privileged to.
8. Better record keeping
In addition to ensuring improved reporting, digital payroll improves upon record keeping. By generating and storing these reports online, they can be accessed at any time for whatever purposes. This is unlike manual reports that can be lost or reports with a third party that can take some time and coordination to access.
9. Better access to payroll information
With better recording, employers can quickly and easily access the payroll information they need. This is very useful when an employer opens a legal case related to payroll. The company can easily access and print relevant documentations as proof in such legal cases.
Payroll information can also be useful for auditing and compliance purposes. The ability to access such information online makes life easy for the company.
10. Ensures continuity
When someone from the payroll team leaves and another one replaces them in a manual processing system, there must be a proper and detailed handing over to ensure continuity.
A similar process is needed when a business changes its outsourced payroll provider.
But digital payroll does not require such an elaborate and painstaking handing over. All that is needed is the passing on of the login information to another person in the payroll team. The new person can easily familiarise themselves with the platform and continue from where the previous user stopped. All information, reports, uploads, transactions remain the same and can be accessed with the correct login information.
11. Requires little to no technical expertise
This easier continuity is made possible because payroll software does not require any technical expertise in programming or design.
Anyone with basic computer skills and understanding of payroll can use a payroll software like NOW Money since many of the processes are automated.
12. Helps employers cope with talent shortage
A global labour shortage followed on the heels of the COVID-19 pandemic, according to research by Deloitte. And ADP, an HR systems improvement company, projected back in 2018 that there would be a 3% fall in the availability of payroll professionals between 2018 and 2028.
These two reports show that continuous dependence on manual processing can become costlier in the future (lower supply and stable demand) especially for companies who are growing.
Digital payroll removes the need for many payroll staff and employers can grow with their payroll software at little to no extra cost.
13. Improves overall productivity
By saving time, money, and removing the need for an expanding payroll department, digital payroll can improve the overall productivity of the company.
Furthermore, the more effective a payroll management system, the more employees get paid their correct remuneration at the right time. As employers are happy and productive, the entire company is more productive.
14. Better collaboration across teams
In a previous point, we mentioned that a platform like NOW Money allows multiple users to access the software provided the main person in charge has authorised it and delineated the tasks they can carry out.
This system allows collaboration across teams in the company. For example, the head of payroll can give access to the head of accounting to access reports that the latter needs for preparing financial records or managing cash flow. Similarly, the legal team can also access the software to confirm compliance with relevant legislations.
15. Enhances payroll standardisation
A business can also grow by opening more branches instead of only expanding a single branch. With multiple branches, there is a need to standardise the payroll management system across board. This is also important for global brands who need a coordinated global payroll.
Digital payroll makes this easier as staff from all the branches can have access to the same software and coordinate their activities to ensure an all-inclusive effective payroll management.
Benefits of digital payroll for employees
As can be seen above, the benefits of digital payroll for employers are numerous.
Now, let’s consider the other side – benefits that accrue to your employees.
1. Correct, on-time remuneration
Digital payroll removes the common errors associated with manual processing, as well as the numerous inefficiencies of outsourced payroll solutions listed above.
Consequently, employees are much more likely to receive the correct remuneration amount at the right time through digital payroll systems.
As many of us know, even a one-week delay in the receipt of wages/salaries can cause a lot of damage to our budget. On the contrary, when wages/salaries and other rewards are stable and timely, employees can better plan their finances and achieve their financial goals.
Similarly, the easier access to banking services that NOW Money provides in the UAE can also help employees gain a better control over their financial lives.
2. Easier access to banking services
In a country like the UAE, many expats find it difficult to meet the stringent conditions for opening a bank account.
In response, digital payroll platform NOW Money has provided a mobile banking solution where these expats can receive their remuneration through a mobile wallet that also includes a debit card for various transactions.
By facilitating such integration, NOW Money has provided a way for every employee to receive their wages and salaries as well as other rewards digitally.
3. Enhances well-being and happiness
The errors and delays associated with other inefficient payroll management systems can easily throw them off their balance, leading to aggravation in the workplace.
In contrast, when employees receive their correct remuneration when due, they are happier and have a better piece of mind, which leads to improved mental health.
Also, a flexible payroll management system that allows employers to explore the best way to pay employees can also improve their happiness and wellbeing.
4. Improves productivity
A study by Oxford University has shown that happiness at work improved employees’ productivity by 13%. This is due to higher productivity resulting from better wellbeing and happiness.
By ensuring correct and timely remuneration and introducing flexibility, a digital payroll platform can lead to higher productivity.
5. Increased safety
Because employees receive their money digitally, they are protected from all the security threats associated with carrying cash around.
Similarly, payroll software has the security protocols to safeguard data of employees from breaches. And NOW Money’s user authorisation system adds an extra layer of security.
6. Convenience and sustainability
A digital payroll solution can generate and send payslips to employees digitally, as well as introduce a more sustainable system.
There is no need to carry physical payslips that can be lost or damaged. In the event that an employee needs to tender these payslips in a legal case, they can be easily recovered online.
This does away with paper systems of old, introducing a more eco-friendly and sustainable payroll system.
7. Better employee-employer relationship
When employers fail to pay employees the right amount at the right time, this can create friction in their relationship. Such friction can end up increasing the rate of staff turnover.
However, with an effective payroll management system, employees can create a better relationship with employers since there is less likelihood that friction over payments will occur.
8. Makes it easier to work remotely
A study by Ernst and Young has shown that organisations across the globe expect 29% of their employees to continue to work remotely and 48% in some sort of hybrid model.
This means that an effective payroll management system in this new work environment must have a system for capturing remote workers and paying them efficiently.
A digital payroll system makes this capturing easy. Employees can provide their information digitally, receive remuneration digitally, and get their payslips digitally.
With the benefits highlighted above, it is obvious that businesses who want better payroll management should move to digital payroll solutions and abandon manual processing and outsourced payroll solutions for good.
[Do you want to make the transition to digital payroll? NOW Money provides a simple, flexible, and efficient digital payroll solution, irrespective of the size of your business. Register with NOW Money now or learn more about how we help your specific payroll needs.]
Takeaways
- Digital payroll solutions are superior to manual processing and outsourced payroll providers.
- This is because they provide superior benefits to both employers and employees
- Payroll software is cost effective, time efficient, flexible, secured, among others.
- They also help employees receive correct and timely remuneration, thus increasing their happiness and productivity, among other benefits.
- Moving to a digital payroll solution is essential for every business, irrespective of size
