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3 Types of Payroll Management Systems Your Business May Use


Enable Group | Dec 12, 2023

For Employers ● 4 min read

Managing a business requires vigilance over various aspects to ensure continuous growth. It is not only crucial to oversee daily operations but also imperative to prioritise employee satisfaction. Among the factors influencing employee contentment, effective payroll management stands out as a linchpin for success in any business.

Payroll management extends beyond merely recording employee salaries; it encompasses a comprehensive system that addresses benefits, pensions, taxes, and various other elements related to compensating your workforce. This multifaceted approach ensures that employees receive fair compansation for their services while keeping your company compliant with government regulations.

If you are finding it challenging to keep up with your company’s payroll responsibilities, perhaps it is time to reassess your current system and outsource HR services. In this article, we look into the different types of payroll systems to help you decide which one might be the most beneficial for your business.

1. In-House Payroll System

An in-house or internally managed payroll system is the most suitable option for a small business with a limited number of employees, who consistently work hours from week to week. As its name implies, an in-house payroll system means that you manage it yourself. Since a small business only has a few employees, there is also less space for critical discrepancies to creep in, thereby rendering an internally managed payroll feasible and efficient.

Usually, when you have an internally managed system, only one of your employees is responsible for the payroll. This individual is required to stay on top of workforce changes and be updated with payroll tax statutes for things, such as accurate pay, filing, and tax withholding. However, they may utilise software to manage and maintain the business payroll.

Here are the advantages of having an in-house payroll system:

  • It removes major discrepancies with a small number of employees.
  • It completes all payroll tasks in-house, so the costs are kept to a minimum.
  • There is a low-security risk since payroll data is managed in-house.
  • Certain intuitive tools can be used to make payroll processes simple.

On the other hand, here are the disadvantages of an in-house payroll:

  • It is not suitable for companies with more than ten employees.
  • The payroll is usually not managed by a professional or an expert.
  • It takes up so much of the employees’ time. 

2. Agency-Managed Payroll System

An agency-managed payroll system involves engaging payroll services from an HR outsourcing firm in Singapore whose sole responsibility is to manage and process your company’s payroll. With agency-managed payroll services, every payroll obligation, as well as salary and deposit of your company, will be handled by the firm on your behalf. In essence, the outsourcing firm becomes the dedicated executor of all payroll duties for your business.

The array of services offered by an HR outsourcing firm is extensive, including but not limited to:

  • Monthly Processing of Payroll
  • Single Payrun Processing
  • Online Bank File Generation
  • Preparation of CPF Submission and other Statutory Funds
  • e-Pay Generated Pay Slips
  • Employee Self-Services Access for Pay Slips, Leave and Claims
  • Year-End Tax Submission
  • Submission of Government Paid Leave Reimbursement
  • Payroll Reports Generation in PDF Format, including:
    • Payroll Summary
    • Bank Listing Generation and/or Upload Bank txt file
    • Basic Pay Reconciliation (if required)
    • Cheque, Cash, or On-Hold Listings (if required)
    • Statutory reports and Filing

Because your company’s payroll is managed by an outsourcing firm, which commonly has experts in their ranks, you will get the assurance of absolute payroll accuracy and avoidance of delayed payments. This type of agency often provides well-informed experts to ensure your company’s full regulatory compliance and give you peace of mind.

Here are the benefits of hiring an agency to manage your payroll:

  • It provides a team of experts to handle your payroll.
  • It covers all things related to your business payroll.
  • It is ideal for large businesses with a lot of employees.
  • It offers guarantees for accurate filing and timely payments.
  • It is a cost reduction and increase of efficiency.

Meanwhile, the setbacks that come with an agency-managed payroll system are as follows:

  • It provides you with less control over your systems.

3. Software Managed Payroll System

Software-managed payroll systems are currently growing in popularity, providing businesses with an online portal through which they can manage their payroll with the aid of automation tools. Basically, with the use of payroll HRMS software, you get to handle only the data entry, and the software already does everything else for you—all based in the cloud.

Online payroll provides you with access to your payroll information 24/7 via a secure web portal, with no necessary additional equipment or software to purchase. All the features and tools of the software are hosted online and optimised for your payroll so that you can track employee hours, sick days, and vacations from your computer. Moreover, online tax filing and reporting, payments, and many other payroll-related services are often provided.

Here are the pros of adopting a software-managed payroll system:

  • You no longer need to purchase equipment or software to operate it.
  • It provides excellent options for reporting and automation features.
  • It usually integrates with accounting and HR systems for a complete solution.
  • It features simple and user-friendly interfaces to provide convenience and ease of use.
  • It is available in affordable monthly subscription plans.
  • It usually comes in packages to suit your requirements, with scalable options.

On the other hand, the cons of having a software-managed payroll system are as follows:

  • It still requires data entry work from you or your employees.
  • It is typically not managed by a professional or an expert, so there is still a margin for error.


It goes without saying that in order for a business to succeed, it needs to have an effective and efficient payroll system. When considering the optimal way to handle your company’s payroll, you will find various options, such as in-house payroll, agency-managed payroll, and software-managed payroll. Choosing the right payroll system for your company hinges on the nature of your business and your specific payroll requirements.

If an agency-managed payroll system aligns with your company’s needs, Enable Consulting stands ready to assist you. As a reputable HR firm in Singapore, we offer a range of excellent and cost-effective services, encompassing payroll management, talent acquisition, and HR advisory and consultancy. For those with specific payroll concerns, our comprehensive HRMS provides an all-in-one solution, streamlining payroll management for increased efficiency.

Discover how our services can enhance your payroll management by reaching out to us at any time. Our team of HR experts is dedicated to assisting you, ensuring that your payroll processes become more effortless and functional with our expertise and innovative solutions.

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