Home Business 7 Reasons Managing Payroll On Spreadsheet Is A Bad Idea

7 Reasons Managing Payroll On Spreadsheet Is A Bad Idea


Several new businesses are being registered every day. Apart from handling the primary service provided by the organization, every business needs to maintain its data on both internal and external affairs.

Maintaining employees’ payrolls is one of the essential tasks related to internal affairs that an organization has to keep maintaining. At the beginning of any business, an organization does not have a huge employee base or data. For maintaining less data, the spreadsheet is the best option for most of the newly set up businesses.

Spreadsheets are inexpensive and can do the generally required calculations in an organization. But, things get complicated when business grows. The organization starts increasing its employee base. The responsibility of maintaining the payrolls of all the employees also increases. The spreadsheet may not be the best choice for maintaining the payrolls of a large employee base. Know why a spreadsheet is not the best investment for payroll management and how it can affect your business.

Why Spreadsheet is not ideal for Managing

Manual Work

The spreadsheet is ideal for handling small data as it can do the basic calculation. But if work has to be done on a more extensive database like payroll management, it can be a hassle for the manager. All the data entered in the spreadsheet has to be done manually.

The data keeps on changing, and some things get added while others are removed. Some even need more evaluation. Working manually on these in a particular time frame seems impossible as a lot of data has to be maintained simultaneously.

Files are Difficult to Manage

Payroll lists contain large amounts of information. The more the information spreadsheet holds, the more the file’s size will be. As mentioned before, spreadsheets are ideal for smaller data. Working on large amounts of information can affect the results. Larger spreadsheet files take a long time to process.

Getting work done in the given time frame is important for any manager. However, working on large data in less time can corrupt the files. To reduce the file size, managers will have to maintain different spreadsheet files of the same data. Keeping track of all the files will be difficult even for the managers.

Security Risk

Payroll information is confidential property. Only the authorities responsible for it are supposed to have access to it. In contrast to this, a spreadsheet gives access to everyone.

The spreadsheet also causes security issues for the organization. The person outside the authorized team will get access to it and might use it incorrectly. The leakage of data can also bring fraud cases. Using a spreadsheet doesn’t provide any privacy.

Not Up to the Par

Payroll information is often used to collaborate with other businesses or multiple departments within the same organization. However, it might be not easy to work together if the other party uses a payroll management system or anything other than the spreadsheet for managing payroll.

To work together in this matter, the organization has to keep up with others’ levels. For example, if your business is using spreadsheets for collaborating, there might be chances that working on different files on the same information will cause difficulties.

It Increases Complexity

Management of payrolls requires putting in the same information again and again. Working manually on spreadsheets for the same information can create complexity. If separate spreadsheets have been prepared, then it will create problems. It will be time-consuming, but it will also cause complexities in maintaining and keeping track of the records.

No Automatic Update

Spreadsheets don’t work automatically, which increases the manual work. Spreadsheets prevent automatically updating the required information, unlike payroll management software which enables the managers to enter any detail easily, and the entire database gets automatically updated. Working manually on each data and cross-checking to ensure accuracy is difficult. Payroll managers might leave some information behind, enter wrong data or get wrong calculated results.

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Ending Note

Spreadsheets are inexpensive and convenient tools to use. However, these useful facilities also bring some drawbacks. A business cannot make progress while having drawbacks. Therefore, it is essential to identify all the organization’s drawbacks and tackle them in the right way.

Handling payroll management effectively will save time, but it will also take fewer employees to work on it. Therefore, to have a better outcome in managing payrolls, it is advised to use some payroll management software instead of spreadsheets.

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