How to choose the right payroll software

The use of payroll software makes processing payroll a lot more efficient. Thanks to automation, time-consuming manual processes can be replaced, which reduces the error frequency and increases the accuracy of the payroll. 

However, before businesses can implement a payroll system and harvest the benefits of software-supported payroll processing, they have to decide which software solution they want to use. In the sea of payroll software providers, finding the right solution isn’t always easy. What factors should businesses consider when choosing a payroll software?

Payroll software that’s worth its money should fulfill several criteria. Here are the main features and characteristics every payroll program should have.

User-friendliness

No matter how many great features a payroll software comes with, if it isn’t easy to use and operate, it won’t be of much use for the business. If payroll managers need ages to navigate through the different software functions before finding what they’re looking for, it defeats the purpose of making payroll more efficient.

Employee self-service functions

Employee self-service functions are becoming increasingly important for any kind of software that’s used for workforce management, and payroll is no exception to that. Not only do self-service functions improve the employee experience, but they also reduce the workload of the HR and payroll team. If the latter don’t have to deal with trivial employee inquiries like updating bank details, they have more time to focus on more important tasks.

Scalability

Scalability is an important criteria when choosing payroll software. Even small businesses should think and plan ahead for when their headcount will be higher than at the moment. Business growth is one of the main objectives in any organization. Therefore, it’s important to have software solutions that can grow along with the business.

High level of automation

A rule of thumb when rating payroll software is the less manual work needed, the better. How well a payroll software can fulfill its main purpose (i.e. making payroll more efficient) highly depends on how many processes can be automated. Consequently, the bigger the range of software capabilities, the higher the level of automation.

Integrations

Payroll software integrations are the final step on the way to true payroll automation. Automating payroll processes such as calculating employee wages and issuing bulk payments means less work for the payroll team. But businesses that are serious about making their payroll as efficient as possible need to go further and integrate their payroll software with other workforce management tools, notably their time and attendance management. This way, they can achieve real end-to-end automation and reduce human intervention in payroll to an absolute minimum.

Cloud-based vs. self-hosted

Whether cloud-based or self-hosted payroll software is the right option for a business depends on the already existing IT landscape and expertise. Therefore, it’s not a fixed criteria when choosing payroll software. However, it’s definitely an aspect that businesses should take into careful consideration when picking a software solution to automate their payroll. 

High security standards

Regardless of whether payroll software is accessed and used via the cloud or run on-premises, payroll security is imperative. Before deciding for a specific software, businesses should check for the security standards offered by the provider that interests them. Payroll software with low security levels should immediately be excluded from the short list of potential solutions. After all, payroll data is highly sensitive and should be protected according to the highest standards. 

Easy access to data and data analytics functions

One of the main objectives of using payroll software is to better organize and manage payroll data. To achieve this goal, the chosen payroll software solution should come with a well-structured dashboard and offer multiple functions for viewing, analyzing and extracting different sets of data at any given moment. 

Advanced reporting capabilities

Since payroll reporting is a legal requirement in many countries all over the world, the software should be able to generate government reports on the business’s payroll operations. It should also offer options for internal reporting. Since payroll data is a valuable source of information for businesses, the software should support HR, payroll and accounting in extracting the necessary data for financial reports and strategic workforce planning.

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Compliance support

Payroll compliance is a major part of successful payroll management. And while payroll software can’t compete with the expertise and advice provided by payroll services, it shouldn’t leave the business in the lurch. A payroll system worth paying for helps businesses stay compliant with the statutory rules surrounding payroll. Automatically implementing the latest legal changes regarding tax laws and payroll regulations, sending reminders for filing important payroll reports, and generating said reports in the required format are just some examples of how payroll software can support compliance.

In-built payment capabilities

The capabilities of a good payroll system don’t end with the automated calculation of wages and salaries. Instead, the software should also have in-built functions for issuing payments to employees. Ideally, payroll programs should allow for automated salary payments and enable mass payments to all employees on the payroll with just one click.

Customization

Since every business has different requirements when it comes to payroll and bookkeeping, it’s important for payroll software to be customizable. Businesses should be able to adapt the software functionalities and other critical components to their individual needs. If the payroll software doesn’t allow for any additions or individual configurations, it won’t be able to serve the business’s requirements.

Customer support

Just as any other software application or service, payroll software should come with great customer support. Payroll is critical for every organization and any problem with the payroll system can have severe repercussions that put the business as well as the employees in a difficult spot. If a problem emerges, the customer service should be available to sort the issue out as quickly as possible.