Manual Vs Automated Payroll Management: Which is better and why?

For every organization to function smoothly managing the accounts and
maintaining employee attendance is a crucial job done mostly by the Human Resource Department. In this, the management calculates the payroll accurately and by complying with the taxing authority. It ensures the financial stability of the company as well as impacts employee morale. Hence, every company must conduct their payroll management in a standardized and centralized manner.

Based on this, the company makes the salary paid to its employees. Any typical checklist for payroll includes you also to maintain the following consolidated documents –

Up-to-date employee register

Complete new hire documentations

Tracking impending employee exits

Counting the sick leaves and vacation timings

Changes in salary and other adjustments

Approved attendance, overtime data

But the question, which arises now, is whether the manual payroll management system is better than automation or vice versa.

The Manual Method

In this case, the people working in the company should be able to manage the entire payroll procedure without the help of any computerized software. It demands a lot of time and human effort. You have to monitor the attendance sheet, everyday continually, while also calculating the statutory deductions like Income Tax, PF, ESI, etc. You also have to register every detail on paper.

In the manual system, the chances of making mistakes is also more.

The Automation Method

This procedure makes use of specialized payroll software which automates almost all the vitals steps in managing the payroll. It streamlines, centralizes and standardizes all the data into a single integrated platform so that everyone in the organization can access the details. The data gets centralized, and thus you can share find information across all the departments. There is a very minimal requirement for human intervention. It systematically tracks attendance and overtime duties. It also manages tax calculations and salary calculations on its own.

The advantages and disadvantages of using both –

  • The significant difference is in the aspect of speed. Computerized accounting software process all the data and generate results on its own. The outcome is fast and accurate, with low chances of errors.
  • In terms of cost, manual accounting done by the human resource management is not cheaper. It requires a pen/pencil, paper, and a calculator. Automated payroll management comes with a certain costing amount besides additional expenditure like training, program maintenance, etc.
  • When it comes to security, manual systems are very unsecured. It is easy for other people to take a glance at the paperwork and misuse this information. But when it comes to automation, all the data remains encrypted within the software. Hence, you can protect the employee information.
  • It is very difficult to keep a backup of the manual payroll data. In automation, you can save all the transaction details and keep a backup, unlike the vast paperwork, which gets destroyed from mishandling.