5 Key Pain Points your payroll processing system should address

Written by
Payroll Outsourcing Risks
Akash VM

We all want to solve problems effortless & painless, Right? So, here’s a quick one on payroll….

It is quite imperative to understand that effective payroll processing is vital for every organization’s HCM (Human Capital Management). Size does not determine the importance! So whether your’s is a start-up, small, mid sized or a large enterprise, HCM have the same relevance.

We spoke to a number of senior payroll / HR / finance executives including entrepreneurs to understand the functional effectiveness expected; no matter if the payrolls are run in-house or outsourced. No matter whether you do it on MS-Excel or custom made ERP or a dedicated payroll software, these pain-points must be addressed.

  • Errors & Accuracy

Use of an automated system (or) a software does not eliminate this pain-point. We all need to understand that accurate & error-free payroll processing is a result of sequential steps followed with diligence & patience. Human factors are a significant contributors here. Even if it is rare, the challenges could be quite significant including non-compliance, incorrect financial reporting & employee dis-satisfaction.

  • Compliance Risks

Processing payrolls requires us to adhere to a host of local, state & central laws. The applicability of the laws is usually governed by the number of employees an organization has. It includes but is not limited to tax with-holdings or TDS, perquisites, provident fund, professional tax, ESI, labour welfare, payment of wages, gratuity, maternity, minimum wages etc. The compliance requirements, apart from making appropriate remittances to such acts, also involve detailed periodic reporting to the competent authorities. If not compliant, it could lead to heavy penalties, audit observations & low trust among the staffs.

  • Data, Data & Data !

One of the greatest risks is NOT to have payroll data archived & backed up. Indian laws require all companies, whether small or large, to store this data for a period of 7 years (How many of us know this?). It is quite distressing that this fundamental rule is ignored (willing or not) by 76% ! Not only as a rule but data is also required to ensure protection against future employee claims or litigation, benefit payments such as gratuity, maternity, statutory bonus & the like. No Data ? Be ready to get face notices from tax officers, penalties, un-necessary litigation, incorrect/excess benefit payments & ofcourse employee dis-satisfaction.

  • Staff Churn

Having a system & process which is independent of staffs / payroll executives will be quite a pain, if it already hasn’t. Job changes are common & what we don’t want is the data, payroll policies, best practices & processes to be lost in this churn. It is necessary to have a fail proof system which ensures continuity of the payroll, compliance & all associated activities incase of a crisis or emergency. Ensure your staffs are paid on-time & you are compliant managing staff churn as well.

  • Up-to-date Knowledge (MOST IMPORTANT)

That’s why it’s the last. The data, numerous acts to be followed, complied, reported & managed, you need executives with up-to-date knowledge all the time. There are changes quite frequently & out-of-date understanding can jeopardize your payroll activities. So, how would you find better ways to be updated ? Read, Forums, Newspapers, experts ? It’s for you to figure it out !

It is time that we all accept the truth that legacy payroll processing solutions do not solve these pain-points.

We all need something BETTER.


Btw, a beautiful & fool-proof way to address all the above pain points is to outsource your payrolls to Relativity. We are fondly called as “The Compliance Experts”. 70,000 employees across 200+ organizations outsource their payrolls to us. They are 100% accurate, fully compliant & process-driven. To know more, drop an email to [email protected] for more information of how we could be of help.


Stuff you need for a perfect Payroll


Article Categories:
Payroll · Statutory Compliance · TDS