SMEs automating payroll management - should you start? What are the benefits?

More Singaporean businesses are automating their payroll systems and if you have not adopted this approach, you could be part of the group held back from reaching a more efficient business operations potential due to using manual payroll systems, such as issuing written cheques to employees.

So why is it so hard to switch?

Old habits can be hard to change. Some business owners still use cheques because of the physical tangibility of giving out salaries and the sense of security in signing off these cheques one by one and recording them down in chequebooks.

Others may possibly not be aware of the cost and time benefits adopting payroll automation could bring to the business, HR and finance operations and the workplace welfare of employees:

Time and cost savings let SMEs focus on running the business

SMEs run at a frantic pace. It can be hard to keep track of payroll matters and ensuring they are being processed effectively on time.

Passion for Food is an SME that started with just eight employees at a single location, the F&B enterprise has now expanded into four eateries around Singapore, with about a hundred employees.

Our accounts were initially very simple, but it got more complicated as the business grew. We started to hire more employees and more time and effort were needed to keep track of the payments and salary details - Damien Low, Founder, Passion for Food.

With payroll automation, Damien can perform monthly payroll and CPF computation automatically without delays. He is also able to keep track of transactions in real-time as the solution provides up-to-date visibility of account information that can be checked on the go, 24/7 round the clock.

It also eliminates human error and ensures employees are paid on time without delays or the need to spend time writing cheques or withdrawing cash salaries.

Now, Damien has freed up more time and resources to develop business strategies as well as focus on his true passion for food. Other SMEs have also experienced the same benefits with the solution.

Avoid unnecessary fines by staying regulatory compliant

The Ministry of Manpower (MOM) in Singapore has made it compulsory for all employers to issue itemised payslips.
Failing to abide can result in firms facing severe penalties or fines.

A disadvantage of manual processes is that they require staff to conscientiously make changes to their routine processes to stay on top of all laws and regulations regarding financial compliance.

Systems can help to prevent non-compliant occurrences from happening as the turnaround time on getting regulatory updates into software is faster and on a more regular basis in adherence to laws compared to employees manually doing it.

Empower your staff with smarter use of time and to give back to the business

Manual processes also restrict employees from adding more value to businesses. According to a Mercer's Singapore Employee Engagement Index, 32 percent of Singaporean employees may not advocate their companies as good employers, higher than the global average of 24 percent.

The biggest issue? Lack of opportunities to grow.

Manual processing of matters like payroll can bog down employees' time and resources. Manual calculations and cross-checking of CPF, SDL, CDAC, MBMF, SINDA contribution on behalf of each employee for submission to the CPF board can be time consuming, error-prone and repetitive.

Payroll automation is not only able to automate the above calculations without error, but it also provides greater visibility and tracking for bookkeeping or budget forecasting all on a single screen.

This allows HR and Finance employees to free up their time to embark on cross-functioning upskilling opportunities and other business pursuits that can help grow and give back to the business in the long run.

Ultimately, happier and more empowered staff improves employee satisfaction, productivity and retention.

32 percent of Singaporean employees do not advocate their organisations as good employers, with lack of opportunities to learn and grow as one of the main reasons.

Protect your business and employees from security and fraud risks

Asset misappropriation continues to be one of the most common types of fraud in Singapore, affecting 44 percent of businesses. This includes payroll fraud and cheque tampering, activities in which employees intentionally use inaccurate figures when processing payroll or writing cheques to embezzle or steal a company’s cash and assets.

Manual-based systems make it easier for unauthorised personnel to tamper with cheques or finance records due to weak checks on book balances. This can cause revenue loss, reputational damage, legal fees that can end the business.

For SMEs looking to protect their business from fraud, UOB Payroll provides access rights and batch authorisation management that not only helps SMEs to speed up payroll process, but also ensures only authorised personnel have payroll rights access.

44 percent of businesses in Singapore experienced asset misappropriation which includes payroll fraud and cheque tampering.

Digitalise your payroll systems today

To remain competitive in today’s increasingly competitive business environment, SMEs must ensure that no aspect of their business operations is acting as a bottleneck. Therefore, it's important for SMEs to digitally transform the payroll function, since a manual payroll system can cost businesses time and money, inefficiencies, and potential fraud occurrences.

By adopting cloud-based automated payroll systems, SMEs can have the confidence that their payroll is enabling – rather than holding their business back.