Why should companies small and large use HR and Payroll cloud software solutions?
Maintaining employee records in small businesses is hard work when done manually using filing systems, even if they are all electronic PDFs files neatly sorted and stored in different folders.
For example, storing employee records, such as appraisals, goals and objectives, absence history, salary history, employment contracts and many other types of data on folders has several disadvantages. First, there may be a need to constantly update folder permissions to enable or disable access from colleagues who need to get the data. Thus maintaining an updated access policy is an added burden to the IT administrator and companies can often become lax. Some companies don't even disable access after employees leave. Another burden is the manually task needed to drag and drop the file in the correct folder, and this requires training for anyone who is doing this task so that the task is done exactly the same by the many number of people who might one day be doing the work.
Using cloud software solutions, specifically for HR or for payroll, mean that there are often employee file checklists, online forms to capture correct and relevant data and pre-set templates that can be used for anyone and there is almost no deviation. Data is neatly stored in employee profiles and can be navigated to within the system. Whether people are in the office or at home, using corporate VPNs or home internet, every person who needs access will be able to work with the data they need.
Doesn't my accounting software do payroll and HR already?
Yes and no. It's true Xero, Quickbooks and other popular cloud-accounting software packages do have some functionality for storing employee profiles, payroll data, and absence data, however, these interfaces tend to be rudimentary and do not have very user friendly UI for employees.
Additionally, these software packages are not built with HR or payroll in mind, so the functionality that they do have is often quite limited. They also don't have any compliance features, so it's easy to make mistakes that could lead to unhappy employees. Using a dedicated cloud software solution for HR or payroll will give you a much better user experience, more comprehensive feature set, and will help you work as a company administrator. From calculating the payroll to ensuring account numbers are correct for payment to employees and making sure the correct PAYE is being charged, these are often automations found in HR and Payroll software.
What's the difference between HR and Payroll software?
HR software is focused on employee data management. This means that the software will often have comprehensive employee data fields, work & pay, home address, employment contract, length of employment, offer letter, signature dates, which fixed assets (for example maybe laptops or mobile phones) and are often accompanied by employee friendly features like directory search, appraisal history, compliance training, etc. In bigger companies, such as large multinationals, these software solutions are often developed by Oracle or SAP and have complex talent management modules that enable full large scale headcount planning and promotion activities to take place. In smaller companies, this may not be so formalised but often visibility to job performance is often key to making personnel decisions.
Payroll software, on the other hand, focuses on making sure the correct salary is applied to an employee profile. For example, if an employee is being paid £1500 a month, and has the tax code 1257L, are the correct deductions from salary being made, and is the employer contribution on things like employer NI being calculated properly. Once these are done, then the software is often integrated with HMRC so that PAYE data can be submitted once a month. This is a necessity for nearly all UK companies that pay their employees on the PAYE scheme. The government uses this data to prepare economic forecasts and to also gauge the health of the economy.
Payroll software will also often have the ability to calculate holiday entitlement, and to also manage shift patterns for employees who work unsociable hours or on a rota.
Why are there software solutions that have BOTH HR & Payroll in one?
That's a good question. In the last decade, with the reduction in the price of quality software and the migration to cloud-based applications, software has become affordable for small medium companies as well as Enterprise level firms. Small companies also need to run payroll and manage HR data but often have nowhere near the need for formalised processes and quantity of data consumed by large multinationals. Hence, software that streamlines the payroll process also needs to have inputs from HR fields, for example, name and address of the person, the date of birth, the salary, etc. Software solutions like <a href="/product/payroll/>ShiftAI's Payroll have been created to simplify the process for SMEs so that all the core processes can get done as efficiently as possible with the need for added manual tasks to be done outside of the software.
The decision to get software that handles both HR & Payroll is therefore usually best decided by the size of your company and whether the software is able to complete the tasks that are needed. Often, this enables a person to drastically reduce administration time, and may in some medium sized companies avoid the need for dedicated headcount as an office manager could just as easily run the payroll as an accountant might given that the software makes it relatively simple, reducing the need for training and subject matter expertise.