Importance of Payroll Integration in ERP

In most large and medium organizations payroll is an essential monthly activity, which is fairly routine in nature. Depending on the size and nature of the organization, this activity can be fraught with complexities related to calculations, deductions and statutory regulations.

Enterprise Resource Planning solution has been implemented in most of the big enterprises in India and many of the mid size companies are in the process of implementation. The ERP vendors are providing solutions customized to midsize and smaller enterprises to suit their needs and investment capability. ERP systems are integrated software solutions encompassing all areas of operations of an enterprise like Manufacturing, Distribution, Finance, Procurement, and HR. While the implementation of Enterprise systems is fairly widespread in India, Payroll integration is usually overlooked during ERP implementation and some of the companies take up payroll/HR implementation as last priority

Since the payroll operation involves multiple stakeholders performing different activities, it can be quite cumbersome and error prone to manually enter the payroll expense into the company General Ledger. Integrated HR, financial and ERP systems streamline many of the daily tasks and information processing required to efficiently manage day-to-day business operations. The integration enables both the application to share seamless information. As a result the expenses incurred, captured in the payroll module can be reflected in the General Ledger module of ERP Financials, thereby preventing duplication of effort and errors. Data once entered into the system multiple times can seamlessly update other modules. The integration reduces duplicate entry and redundancies and eliminates the cost of custom integration between modules. For example, reimbursement of employee expenses through account payable can be accomplished with payroll integration to account payable. Payroll integrated with ERP gives employees self-service capabilities, and help business run in compliance with the law.

Integration is an extremely important part to ERP. ERP’s main goal is to integrate data and processes from all areas of an organization and unify it for easy access and work flow. ERP’s usually accomplish integration by creating one single database that employs multiple software modules providing different areas of an organization with various business functions. HR and Payroll go hand in hand in every organization and therefore ERP system should provide robust payroll solution which can handle local tax rules and other imperatives of employee compensation peculiar to each country. Localization of payroll is a very important prerequisite for ERP HR to take wings in India. Many organizations who have implemented ERP HR systems have either interfaced legacy payroll to ERP or custom developed payroll package in ERP system.

The strengths of the HR and Payroll module are multiplied, when used as a fully integrated part of the broader Enterprise Resource Planning (ERP) solution. For example:

Financial management – detailed costs are captured in Payroll and summarized at the appropriate level in the General Ledger for effective business analysis without time-consuming reconciliations.

Project management – seamless coordination with the Project module offers users up-to-date, well-managed competence data for resourcing projects.

Performance management – managers can report, analyze and perform metrics on their operations and instantly introduce required changes, as a consequence of their findings

Which payroll integrates with ERP?

There are various payroll software which integrates with ERP, but it is always advisable to to have all the modules from same company as integration is much more seamless. You can check http://www.pocket.in for Sage software’s Payroll Software which seamlessly integrates with Sage ERP

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