What is cloud payroll? Benefits of cloud payroll software

Guide5 mins read1.1K views | Posted on August 30, 2023 | By Christopher

Until recently, many small businesses have been reluctant to adopt new software because of the upfront cost involved in setting it up. Only enterprise-level players could really imagine being able to implement software to optimize their operations. However, disruptions in cloud-technology have made business software easily affordable for businesses of all sizes.

The global cloud-based payroll software market is expected to be worth US $ 17.39 billion by 2027, and the benefits of cloud-based software are unparalleled in terms of operational efficiency and cost savings. Businesses are able to improve their efficiency by deploying new software with minimum risk and reduced internal staffing requirements. It also allows them to pair greater reliability, security, and privacy with higher productivity, reduced cost, and quicker return on the minimal investment incurred.

In this guide, we will look at what cloud payroll is, and the benefits of cloud-based payroll software, and what it brings to the table for optimizing your payroll operations.


What is cloud payroll software?

Cloud payroll software is a payroll management system where you can access, operate and control everything about your payroll from onboarding employees to ensuring compliance to handling exit processes over a remote system - the cloud - with nothing but a computer connected to the internet.

A cloud-based payroll system is a massive support for employers who are still operating remotely, including the payroll department. It allows employees to work from any location, and have access to the same information that they'd have access to from their office. All this, while ensuring safe payroll transactions and data maintenance with fine grained security protocols, preventing data breach or unauthorized access.

Benefits of cloud-based payroll software

Operational advantages

  • Saving upfront costs
  • Empowering businesses to be faster and more efficient

Core payroll advantages

  • Centralized employee data
  • Simplified compliance
  • Reduced workload for payroll staff
  • Unified business processes
  • Real-time data, anywhere in the world

Saving upfront costs

Embracing cloud-based payroll software frees businesses from the complexities and expense of purchasing, maintaining, and upgrading legacy on-premises systems. From the perspective of your head of finance, there is no capital expenditure and huge savings in cost, regardless of the size of your business.

Cloud systems are also easier for your IT department. Unlike legacy on-premises systems that require significant in-house work to update every few years, cloud payroll systems are updated by their vendors as often as needed, often several times a year, with virtually no implementation work from your internal IT department.

That's in addition to the massive cost savings associated with not having to invest in servers and other hardware to run on-premises systems, or the people needed to maintain them.

Empowering businesses to be faster and more efficient

When one of our prospective clients was recently asked why he wanted to switch to a cloud-based payroll system, he replied, "We absolutely have no issues with the way our current system is calculating payroll, but it is aging badly. The system is not up to the needs of today’s fast-paced mobile, interconnected, and data-dependent world. Additionally, the customization of the system once used to be a strong point now proves to be a double-edged sword, as making upgrades is incredibly time-consuming, resource-intensive, costly, and risky."

This is typical of the reasons that businesses choose to make the switch—even a high-quality legacy system often ages poorly and takes up significant resources to complete routine payroll tasks compared to a cloud system. Also, cloud payroll software allows business owners to access their payroll information from wherever they are, allowing payroll professionals to respond faster to employee requests, and to get their own work done faster.

Centralized employee data

Payroll is more than just about calculating your employees' paychecks. If you don't organize all your employee records in a central place right from the employees' first day at work, it can affect the paychecks' accuracy. For example, a wrongly entered or misremembered Date of Joining could mean an employee losing out on a whole day's wage. For the employer, that is a compliance nightmare.

With cloud payroll software, you can track and manage the information related to all your employees' life cycle events, such as onboarding, benefits, salary revisions, leaves, and investment declarations, using one centralized source of data. You can also manage all employee communications from a centralized location.

Simplified compliance

Unlike legacy software, the cloud-based payroll software allows you to adapt to compliance changes on the fly. In India, there are various regulatory laws such as new budget announcements, revised deduction percentages, and other changes that can now be handled faster. With one update to the central server, you ensure that your business stays compliant with all the statutory compliance laws for PF, ESI, PT, LWF, IT, and other updates made by the Government.

Reduced workload for payroll staff

Maintaining employee records, collecting proofs, and validating submitted proofs takes up a major chunk of every HR's time month by month. Additionally, responding to clarifying questions with back-and-forth emails is extremely time-consuming. Cloud-based payroll software with employee self-service portals allows you to delegate some of your routine work back to your employees. Employees can submit their proofs themselves, while employers can validate them and approve or reject the submitted proofs online. If something is missing, you can send real-time messages to request supporting documents from your employees, avoiding the hassle of back-and-forth emails.

Unified business processes

It is well known that the HR, payroll, and finance teams of any organization have to come together to implement payroll successfully each month. Your employees' personal information, tax-related data, leave and attendance data, bonuses and other information has to flow into your payroll system automatically for a flawless payroll. Business departments used to work in silos to bring all this information together, but with cloud technology, integrating complex business processes is a lot easier. A tightly integrated HR, payroll, and accounting system make real collaboration possible.

Single sign-on enables your staff to switch between multiple systems without the need to remember multiple passwords. Secure access controls improve cross-department collaboration without sacrificing security or usability. The information flows between departments in real-time, effortlessly.

Real-time data, anywhere in the world

In a recent survey of senior finance executives by CFO Research, nearly 41 percent of respondents said their management teams cannot access the data they need when they need it. Nearly two-thirds said their information systems are duplicative and complex, and that the financial and performance information used for decision-making is not as useful as it should be.

The biggest reason for these problems is that most businesses are using redundant systems with technology that's many years out of date.

Cloud payroll software delivers information, insights, and consolidated payroll metrics in real-time, without the need for separate business intelligence systems, separate data warehouses. From getting a view on consolidated payroll expenses to overall tax-liabilities, the information is available in a single click.

The way forward

Cloud payroll systems offer numerous advantages over traditional systems like spreadsheets or on-premises payroll software. With the future of getting back to work uncertain, many companies would benefit from considering remote work as an option for their employees, including remote payroll management.

With Zoho Payroll, business owners can manage their payroll operations end-to-end. The in-house accounting and HRMS systems allow them to eliminate multiple vendors for these functions. Self-service portals in both web and mobile app allow the payroll staff to digitize time-consuming paperwork. Zoho Payroll also has the power to manage a distributed workforce with ease, allowing your staff to continue your payroll operations from wherever they are.



  • Alpesh VaghasiyaDecember 28, 2023 at 1:28 PM

    Thanks for sharing this insightful post! Managing payroll efficiently is crucial for any business, and your expertise shines through in your content.


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