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Why do so many companies still rely on spreadsheets in payroll processing?


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Businesses across the globe are always searching for ways to take their payroll systems to the next level. 

Today’s unprecedented advances in technology provide them with a wealth of opportunities. From increased automation to cloud technology to AI, new solutions are readily and regularly available to companies looking to enhance and optimize their payroll landscape.

It may come as a surprise that, according to our poll of 271 companies across 42 countries, 51% are still relying on spreadsheets to process their payroll. 

Why would companies with the latest advances in automation and integration at their fingertips maintain a dependence on methods that seem so outdated?

While it might be tempting to simply lay this at the feet of “resistance to change” or “old habits dying hard,” there are more often practical reasons for this enduring reliance:

1. Lack of system integration – Their current payroll system cannot smoothly import data from their HCM.

2. Costs/Time – Concerns about the costs and time involved in upgrading their payroll system.

3. Lack of confidence in an automated system to handle their payroll’s complexity – Doubts about an automated system’s ability to capably conduct audits and ensure data accuracy.

We’ll examine these reasons in more detail and explore possible solutions to address these concerns. 

Lack of system compatibility

Having both a quality HCM and a modern payroll solution doesn’t necessarily add up to seamless integration. 

Many companies operate on systems that don’t allow direct export of data between their HR and payroll systems, meaning they need to export spreadsheets from their HCM that can then be fed into their payroll engine.

Terminations often pose an added complication. When employees are terminated, some payroll systems revoke their access to the system immediately, making it difficult for them to access final payment and tax information, making it necessary to keep spreadsheets on hand. 

For some companies, keeping spreadsheets on file with their accountants, who tend to retain them for the duration of the tax year, offers a workable solution. 

Integration costs/time

While many organisations readily acknowledge that upgrading their systems would eliminate the need for spreadsheets, they view integrations as being too costly and time consuming to justify the investment. 

Some see their businesses as moving too fast to accommodate the delays that an implementation might entail. Others worry that the ongoing maintenance of an integrated system will further slow them down.

While these organisations might not be entirely satisfied with the use of spreadsheets in their payroll processing, their apprehensions about the integration process, with its potential costs and long-term maintenance, lead them to the belief that they are simply stuck with what they have.

Lack of confidence in automated systems

Finally, many businesses simply don’t trust automated, integrated systems to handle the specific complexities of their particular company’s payroll processing. They doubt the ability of even the most sophisticated software to handle their various different data streams and believe that calculations performed using spreadsheets are more reliable.

In related cases, some companies that use integrated systems for payroll processing still use spreadsheets for audits, reconciliations and analyses, or post-integration data checks, feeling that they remain the most useful, reliable method and are essential to pre- and post-payroll review. 

Alternative solutions for payroll spreadsheets

While the reliance on spreadsheets in payroll processing is often rooted in practical reasoning, it’s important for companies to be made aware that there are alternative solutions available to them.

While it is certainly true that, even among some market-leading systems, integrations between an organisation’s HCM and payroll solution can be limited. There are solutions that guarantee seamless integrations, eliminating the need for spreadsheets and manual data export.

Similarly, there are integrated systems that do not instantly shut down access to employee information in the event of termination, allowing for easy, automated processing of final payslips, etc.

Implementing a new HR and payroll solution is not a trivial consideration. Naturally, any organisation will want to consider the time and money they will need to invest in their transformation. 

However, while HR and payroll transformations don’t happen overnight, the time invested in transformation projects can be significantly reduced by working closely with expert implementation partners. 

Experienced implementation teams can help companies design comprehensive integration strategies to minimise delays and complications, while also remaining agile enough to quickly and efficiently deal with unforeseen circumstances. 

Similarly, companies struggling with concerns about the cost of an HR and payroll transformation project would do well to consider the long-term savings the project can offer. An investment in integration today can mean a significant ROI tomorrow.

Data accuracy will always be a top priority in payroll processing, and trusting automated systems with sensitive company data can make some companies understandably wary. But are audits, analyses, and reconciliations performed on spreadsheets really more reliable than those performed by integrated systems? 

In an age when technological innovation is progressing at such a rapid pace, it can be difficult to keep up with the astounding capabilities some of the latest developments can offer. The truth is that the best integrated systems can deliver 99.99% data accuracy.

No organisation wants to rely on outdated and inefficient payroll systems. Those companies that still make use of spreadsheets in their payroll processing do it because they believe it’s the best option for their organisation. This is why it’s essential that these companies have access to the latest information regarding the limitations of spreadsheets and the capabilities of fully integrated and automated HR and payroll systems.

With today’s technological innovations at their fingertips, no organisation should feel stuck with the system they have.


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