What is a Payroll Tracking System and why does It Matter?
Table of Contents
Did you know that payroll compliance is a top challenge for 63% of HR professionals? Also, over 43% of organizations use more than one payroll system and subsequently face issues related to data fragmentation. Both these findings highlight a growing need for an integrated payroll tracking system.
Such a system would also help improve your employee satisfaction. This is so because it would facilitate timely payments. An all-in-one payroll management software would also track updates in tax regulations.
In India, a payroll management system becomes even more crucial, as it would simplify compliance with central and state-specific regulations. Because of all these reasons, businesses are heavily relying on payroll tracking systems.
What is a Payroll Tracking System?
A payroll tracking system is a software that tracks payroll processes like tax management and salary transfers. It also automatically calculates wages and arrears. Furthermore, features like payroll reports help you in reporting your payroll management processes as well.
A payroll management software does all this with two main features:
- Calculate deductions and file taxes automatically with this software.
- The program combines attendance and time tracking modules and tracks work hours and absenteeism patterns.
These optimized payroll processes are faster and more efficient compared to manual payroll.
Why Accuracy and Timeliness Matter in Payroll?
Accurate and timely payment of wages is necessary because:
Legal Repercussions:
Failing to comply with payroll regulations could result in penalties and could also tarnish your reputation as an employer. Regulations such as the Payment of Wages Act (1936) and the Industrial Disputes Act (1947) stipulate a specific time duration within which employees must be paid.
Employee Satisfaction and Employee Retention:
Untimely payments would dampen employee morale. They would also result in higher employee turnover rates.
Setbacks in Processing:
Delays in payment of wages could also delay payroll reporting. This could lead to delays in auditing your account. Organizations would not be able to accurately anticipate their future financial resource needs.
What are the Key Features of an Advanced Payroll Tracking System?
An advanced payroll tracking system offers the following features:
- Real-time attendance and leave integration.
- Statutory compliance and automation,
- Salary structure and customization,
- Payslip generation and reporting.
- Integration with HR and accounting systems, and
- Secure employee self-service portals.
Real-Time Attendance and Leave Integration
Real-time integration can simplify and speed up data transfers. With such inbuilt integrations, you can easily integrate your leave and attendance modules. You can track employee performance in real-time and reward them suitably. Your HR professionals would also be able to identify absenteeism patterns and avoid workforce disruptions.
Statutory Compliance and Automation
Automating payroll would make it easier for HR and finance to comply with labor and tax regulations. The software would automatically run calculations on tax deductions, such as PF and ESIC. This, in turn, would minimize errors. It would also provide real-time updates on changes related to minimum wage legislation and regulations regarding leave, among others.
Salary Structure and Customization
Payroll software also allows you to set multiple salary structures. You can specify criteria related to various components, like arrears. You can also provide performance-based incentives. Firms operating in multiple locations can specify various payroll policies as per their regional regulations.
Payslip Generation and Reporting
The software auto-generates payslips and distributes them to employees. It could also provide payslips in the employee’s vernacular language. It also offers comprehensive payroll reports for analyzing labor costs. This aids in the decision-making process.
Integration with HR and Accounting Systems
An automated payroll platform also seamlessly integrates with HR and accounting systems. In HR systems, it integrates with performance and time management softwares. Because of this, HR professionals can link payroll with performance and can reward high-performing employees. Such systems could also help provide fair compensation for overtime. Integration with accounting systems, such as QuickBooks, also facilitates faster payments.
Secure Employee Self-Service Portals
Employee self-service portals empower employees to perform common HR operations. They can submit claims for off-cycle payments. They can also upload supporting documents for tax and other investment declarations. Moreover, they can track their leave balance and view their payroll-related information on the go.
What are the Benefits of Payroll Tracking Systems?
An automated payroll tracking system helps reduce costs and minimize human errors. It also helps in decision-making by generating comprehensive reports. Here are more details about the benefits of payroll tracking software.
Reduction in Manual Errors
A payroll software enters data related to attendance and leave on its own by integrating with various modules, like attendance and leave management modules. It also automatically calculates various salary components and deductions like tax and arrears. By eliminating the challenges of manual payroll, both these processes reduce errors while calculating payroll.
Timely Salary Disbursement
The software directly transfers salary to employees. It does this by integrating with accounting softwares like Tally. This software also integrates with banking APIs.
Reporting and Analysis
A payroll management solution helps in optimizing your financial resources and in anticipating future needs. It offers a clutter-free dashboard with payroll analytics. It also provides custom payroll reports according to your preferences.
Improves Employee Satisfaction
Such software also improves employee satisfaction. Employees can easily access their payslips online. They can submit claims and ask for arrear payments as well. Some advanced solutions also offer chatbots to answer common queries of your employees related to payroll and deductions.
Cost Reduction
75% percent of Indian businesses face shortages in payroll staff, and 93% of them plan to expand their payroll teams. An automated payroll software would eliminate the need for more staff by automating many payroll tasks.
Conclusion
Advanced payroll tracking software is bringing about a paradigm shift in how payroll is managed. Earlier, HR professionals needed to access government documents to stay up-to-date on changes in employee legislation; the payroll software can provide real-time updates about labor regulations online.
Before, tax calculation used to consume a lot of valuable time for the payroll team. Now, the payroll tracking system has completely automated salary calculation. With the integration of AI and predictive analytics, a digital payroll management solution seems to be the future.
Seventy-five percent of organizations are integrating AI with payroll management software, and around sixty-five percent of organizations are relying on predictive analytics to anticipate labor costs. Consider booking a free demo with factoHR and experience the future of payroll management unfold with an AI chatbot and predictive analytics!
Grow your business with factoHR today
Focus on the significant decision-making tasks, transfer all your common repetitive HR tasks to factoHR and see the things falling into their place.
© 2025 Copyright factoHR