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Advantages and Disadvantages of Using Open Source Payroll Software

Payroll software is a holistic payment system that is associated with employment tax filing and payment. Spreadsheets have been the norm for managing a payroll but it doesn’t exact on precision. According to research conducted, 88% of spreadsheets contain human-made errors. 

An open HRMS Payroll can streamline the way payroll is managed. It can also reduce payroll processing time with methods involving advanced payslip generation based on salary structures, rules, and timesheet. 

There is stronger advocacy for open-source methods for payroll software as opposed to their commercial counterparts. It has often been touted as a superior option while others have vehemently disagreed. 

To think of it, the concept of an open-source software traces back to the 80s, and now what seemed to be an unimaginable feat, has made its way into global enterprises like Amazon, Google, IBM, etc. 

And, open-source payment software has also found its timely client pool with expected growth at 9% CAGR between 2019-2025. Since, organizations do feel the challenges of using payroll management norms, as opposed to a holistic payroll system, there seems to be expected traction in payroll software usage in the coming years. 

Payroll software is often seen as the most valuable asset by finance professionals. The software essentially automates tasks like bookkeeping, tax-friendly reports, and expense forecasts. But hindrances might be faced in terms of integration or customizability. 

So, here are the advantages and disadvantages of open-source payroll software: 


Open source payroll software can improve the payroll management system of an organization without straining their organizational budget. As opposed to choosing a full-time HRIS, a company can essentially use open-source payroll automation software for standardized outputs. So, here are advantages to look out for:

  • They are Inexpensive 

Open-source payroll software can help a company cut some corners. They won’t require the necessity to rely on a professional service for payroll management. Although payroll software can’t be an ideal counterpart to a professional service, the user experience, and usage acquaintance can provide equal competence. 

  • Does not Require Any Expert to Operate 

If you are using the right software then pair it up with someone with a sound background in IT, they can easily manage a company’s payroll management system. Smaller companies adopting open-source payroll software can perform well with the flexibility a software like that offers. 

  • Add-on Layer of Security 

Financial data is a valuable asset for any company. So, protecting the vulnerability of data is intrinsic to any payroll or financial system. No one wants their credentials to get leaked or lost. A holistic and open-source payroll software can ward off that paranoia by keeping a copy of such data over the cloud, making that information easily extractable whenever it’s required. 

  • Sense of a Community 

With the increasing number of open-source platforms coming into the business arenas, companies are also open to the idea of a developer community to talk about the payroll software. Like most open source communities, payroll ones are also quite active. Users are also posting tricks and tips, sharing insights, and participating in community-centric activities. Some participants are also creating blogs to help others troubleshoot a general issue that they feel is faced by everyone.

A company starts using open-source payroll software, their participation is also expected. In collaboration, they will find more innovative ways to update the application. It might be the case that your company has a very specific need for that software and there is a method to that workflow. The company can then starts  a thread or find mutual companies that follow the same method, finding meaningful insights and engagement


  • Long-term cost

An open-source payroll software might result in a company to stack up some immediate costs down the road. Although that fire can be put out if required attention is distributed. Since an open-source software does not rely on any vendor chain, it will be up to the in-house help or the outsourced ones to fix whatever seems to be at stake. Other associated factors that need to be considered are staff training and implementation cost. 

  • Lacks an after-sale support 

Although support can be found through respective software communities and forums, there won’t be any on-going support from any commercial vendor. If a company is not very acquainted with the software,  they’d have to wait for community members and other users to guide them through. This help can come at the expense of company time and other resources. So, if the company is keen on providing time-intensive services, they’d also expect the same from software that they rely on. In such a case, proprietary software that is backed by high-end support is recommended. 

  • Software Death 

There are chances that open-source software can be abandoned by their creator. That also means, no updates and fixes, and for a company to function with that software, there needs to be a quick replacement or chances are that the company will be losing out on their resources. 


Given the kind of advantages and disadvantages a company might come across, an open-source payroll software works as long as the company finds it difficult to find resources to support their payroll hub. But eventually, a holistic or a manual payroll system can be opted against an open-source one, especially when they have long term goals associated with their firm. 

The choice of implementation will be user and situation dependent. But it is recommended that a company factors in everything before choosing their preferred way of payroll automation. 

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