A recent news story about energy-efficient appliances described a couple who had replaced their washing machine, dryer, and refrigerator with brand-new models. They were surprised to see a reduction in their monthly utility bills of more than 20%. The story went on to describe how the couple were unaware that their older appliances were costing so much money until they actually replaced them. It caused us to wonder how many businesses are in the same position by continuing to use legacy payroll systems.
We consider a legacy payroll system one that uses outdated technologies and processes. For example, if your company still handles time and attendance with paper time sheets, you are still on a legacy system. If you use paper punch cards with a time clock but still enter payroll data into your software manually, you are also on a legacy system. Here's the million-dollar question: is that system costing you money? In all likelihood, yes.
Today's legacy payroll systems were the most modern systems of their time when first introduced. But time marches on, and payroll technology marches with it. If you operate a business that still depends on processing payroll the old way, consider how doing so might be costing your company money that would be better spent on other things.
Payroll Labor Costs
By their nature, legacy payroll systems require more manual labor than state-of-the-art cloud solutions. That means your company is investing labor dedicated to tasks like calculating hours, entering data, and tracking down inaccuracies. All this labor could be redirected to more customer-centric tasks.
How much labor your company puts into payroll really depends on the system you use. The most labor is found in companies that still do everything with paper. Less labor may be the rule of the day for companies that combine paper and computer software. But labor costs are still labor costs.
It is not uncommon for small and medium-sized businesses still handling payroll in-house to have to pay overtime at the end of every payroll cycle. In order to get payroll processed on time using a legacy system, that small number of employees tasked with payroll have to put in extra hours. The more frequently payroll is processed, the more overtime is paid.
Unfortunately, time theft is a very real problem among companies that still use paper time sheets and clocks with punch cards. No matter how hard we try to hire only the most honest and trustworthy employees, there are always those among us intent on gaming the system. Legacy payroll solutions are an open door to do just that. A state-of-the-art cloud solution can greatly reduce time theft, and completely eliminate it in some cases, through the use of modern digital technology.
Believe it or not, workers who find themselves frustrated with outdated payroll procedures will look for work elsewhere. For example, there are plenty of people who would rather work for a company that offers direct deposit than one that still cuts paper checks, all other things being equal. When legacy systems create regular payroll errors, those errors offer further motivation to look elsewhere for work.
High turnover costs companies big time. Turnover forces a company to put time and money into recruiting, interviewing, and hiring. And let's not forget onboarding costs either.
Your legacy payroll system was an adequate solution in its day. But that day has passed. If you are ready to move on to cloud-based payroll with an online solution from BenefitMall, we are ready to get to work. Contact us right away.