What are the potential issues with payroll software?

Incompatibility with other systems.

This is perhaps the stickiest issue and can wreak havoc to your automation plans. Not all payroll systems are designed to work with other systems like HRM, ERP and accounting software. Imagine your frustration to find out your payroll system can’t manage employee records you’ve stored in another application. Always check for integration–how the system works with the apps you’re using–when looking for the best payroll management solution.

Non-compliant features.

Payroll management processes like in accounting are tightly regulated by local, state and federal laws. The system must comply with regulations in an accurate and timely manner, which includes correct statewide taxes, deductions and reporting to relevant agencies. Likewise, the system has to be regularly updated for tax law changes or new regulations. Non-compliance costs you a lot in penalties and surcharges and wastes your time.

Sensitive data in third-party hands.

As with other cloud solutions, the issue of storing sensitive data like employee information and payroll details on vendor servers always rears its ugly head in cloud vs on-premise debates. But if the vendor is reputable and established security shouldn’t be an issue considering the alternative: how equipped and qualified is your company to secure its data?

Incomplete features.

Some payroll management system focus only on core functions as payroll administration and attendance. They leave out non-core but tools that may be key to your workflows. For instance, you may need check printing, real-time reporting, benefits planning and biometrics integration. The problem is exacerbated when you have an existing accounting solution with incomplete payroll features. Should you get another payroll system? In such case, you’re better off looking at the big picture, maybe consider an ERP that addresses all your business processes.

Too much features.

Conversely, a small business with basic payroll needs may end up paying for a fully integrated system. Payroll is often a feature in bigger systems like accounting, HRM and ERP. Make sure you pay only for the features that you use to keep this operation expense at the minimum.