The Difference Between HR Software and Payroll Software

19 September 2022

6 min read

Lynette Teo
Lynette Teo

It’s crucial to realize that payroll and HR serve separate purposes. Payroll frequently overlaps HR, and occasionally the same person in charge handles both responsibilities. Even though these two tasks may have different responsibilities to perform, they frequently need to work together.

Payroll software is typically exclusively chosen by small businesses to manage employee compensation. The organization’s overall people management system needs to be streamlined as soon as the business begins to grow. At that point, HR software brings more clarity into the tasks associated with it.

It is your duty as a business manager to comprehend how their roles differ so that you don’t complicate matters. Coordination between payroll and HR software can boost worker productivity and facilitate efficient business operations.

Therefore, in order to distinguish between the two, it is necessary to comprehend how each piece of software works on its own.

What is Payroll Software?

Payroll software is associated with employee compensation. It helps organizations correctly calculate each employee’s payroll, removing the possibility of any human error.

Automating the entire payroll process is the primary duty of payroll software. Processing, balancing, and reconciling payroll data with the accounting systems are all part of this procedure. Additionally, it takes care of accurately processing any NI or tax.

The software also makes it simple to calculate bonuses, holiday compensation, reimbursements, or overtime hours worked. It serves as a repository for records that verify any data both before and after processing.

Payroll software also automatically prints and delivers payslip and helps maintain compliance with tax regulations.

What is HR Software?

A system for organizing employee data, creating data-driven reporting, and automating manual human resource processes is known as human resource software, human resource management system (HRMS) or human capital management (HRM). Onboarding, recruiting, document management, payroll, performance management, and time and attendance are just a few of its features. This gives you more time to manage the talent of your staff, keep them happy, and boost productivity

HR software plays a significant role in motivating your employees. With the aid of the software, you can quickly devise a reward system or create an employee plan that might include additional holidays, pay, etc. It aids in team building, event planning, and other similar activities.

In other words, HR software provides a chaos-free environment while ensuring that all of your employees strive toward achieving the company goals.

What Areas do Payroll and HR Software Share?

There are many areas where both the payroll and human resources departments need to coordinate. They collaborate on tasks including hiring, paying bonuses, taking vacation time, and deducting employee benefits.

Payroll Management

For instance, the payroll department must be notified if HR has created a new bonus program for the sales staff. They must be kept regularly informed of the performance of the workforce in order to determine the appropriate commission for that employee.

Businesses may experience problems if the paychecks are not processed promptly. As a result, the HR department must process salaries in a timely and accurate manner.

In addition, the payroll and HR departments exchange highly private information such as financial information, and other details about the employee. To prevent the data from ending up in the wrong hands or with unauthorized people, these two departments must collaborate closely.

Attendance Tracking

Absences from employees must be reported, and the HR department must take action when necessary. For instance, when an employee misses numerous days in a succession without a doctors note. HR software also handles this process by automating attendance tracking and management. It keeps track of how long staff members put in each day and whether they miss a shift, to the duration of the breaks.

Benefits Management

Some common employment benefits include paid time off, bonuses, and health insurance. To be a successful employee advocate, your HR department must be able to manage all these benefits. Payroll software for human resources goes beyond salaries and hourly earnings. In fact, the platform can be used by the HR division to update employee profiles and monitor benefit disbursement.

How Payroll Software Differs from HR Software

Now let’s discuss the primary distinction between the two.

Job Function

Payroll software is largely a finance-based role in nature. You may easily adhere to the correct tax regulations and accounting procedures used in your organization by using the payroll system. Additionally, it helps you have a thorough understanding of accounting processes.

HR software, on the other hand, is more focused on people management. The total productivity of the company can be increased by streamlining processes like tracking staff performance and attendance.

Organization Size

For a startup, or small business with less than 100 employees, the business can get away with just a payroll management system, even for employee management. The number of employees is less, and so it can handle them with ease.

Payroll software saves time and effort by minimizing any risk or errors associated with the system for processing payroll. The best part is that it can be even used by non-financial personnel. 

But being a large company, they have a sizable workforce that needs to be managed carefully. For a firm to be successful, workflow management must be consistent. Without the use of HR software, managing a large workforce can be a difficult undertaking.

An HR software helps with the overall workflow process, from the hiring process to track time off and adhering to labor laws. When the organization becomes too large to manage manually, having HR software is useful. It can help track employeesperformance and the hours worked to enhance productivity.


It is obvious that both HR and payroll software are necessary. If HR software aids in keeping track of the hours put in, payroll software aids by calculating the salary they are due correctly. Moreover, departmental communication is promoted through HR management software.

To keep the organization sustainable, both functions are required. Together, they provide a 360-degree perspective of the company and insights, both of which are essential for effective decision making.

Omni HR is designed to be more than just another HR software. Sign up for a free trial and see how we can help you grow your business.

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