Whether you’re running a family-owned trading firm in Nugegoda or a startup agency in Jaffna, spreadsheets often appear to be the practical choice for Sri Lankan SMEs.  
 
It is almost customary here when most small businesses first launch, to manage payroll and HR with Excel or Google Sheets. It’s cost-effective, simple, and manageable, especially with a team of under 5 or 10.  
 
Although Sri Lanka’s SME landscape has grown considerably over the past decade, the level of software and technology use is still known to be relatively low. In fact, according to a 2023 study published in the Asian Journal of Research in Computer Science, nearly 40% of SMEs in the country still operate with low levels of technology adoption, across different areas of their business including essential HR and payroll tasks. 
 
But as your business grows, what once felt efficient can quickly turn into a source of stress. With each new hire comes new responsibilities, and the manual effort, risk of error, and pressure from compliance requirements all increase too. 

The Tipping Point: When Spreadsheets Start to Hold You Back 

In the journey of an SME, there is a point beyond which spreadsheets stop being helpful and start becoming a hurdle. Common signs of this include: 

• A steady increase in manual errors: Salary, EPF, ETF, and APIT miscalculations become more common and cause major headaches for local SMEs when facing audits or employee disputes. 

• Regulatory payroll and tax reports take forever: Generating T10 forms, C-Forms, and EPF/ETF returns can take hours that could be spent growing your budding business. Most local businesses are familiar with the last-minute scramble to meet filing deadlines at the end of the month. 

• Attendance and leave tracking struggles worsen: Manually updating leave balances and overtime entries often leads to inaccuracies, which can result in employee dissatisfaction and productivity issues.  

• No proper audit trail: Without a proper system, it’s hard to track who made changes or when, creating risks during compliance checks. This can increase the risk of errors, fraud, and compliance issues.  

Within small teams, even basic payroll can become painful as operations grow. For example, keeping track of monthly salary changes, overtime hours, last-minute leave adjustments, EPF/ETF calculations, and generating separate T10 or bank files becomes increasingly time-consuming.  

One small manual mistake, like forgetting an allowance update or miscalculating overtime, can snowball into salary disputes or compliance issues.  

Plus, without an automated system, you’re stuck triple-checking spreadsheets every month just to avoid errors. 

Why HRIS Software is Not Just for Big Companies (A Lankan Myth) 

There’s a strong myth in Sri Lanka that HRIS software is only meant for large companies. But this is simply not true anymore. 

Modern HRIS tools in the local market like Humanised Payroll, hsenidbiz, MiHCM, and Better HR, are modular, flexible, and scalable. You can start with just payroll management and expand with additional functionality as your needs grow.  

Plus, with cloud-based subscriptions, there’s no massive upfront investment, which is perfect for SMEs managing cash flow carefully. 

And even with just 5–10 employees, automating your payslips and EPF submissions can save you several hours each month, and more importantly, it gives you peace of mind when also facing audits, Labour Department inspections, and the like. 

It’s no longer true that HRIS software is just for big companies, and for SMEs to understand how they compare to spreadsheets in real-world use, here’s a quick side-by-side breakdown to consider. 

Aspect	Spreadsheets	HRIS Software
Time Taken	High	Low
Error Rate	High	Very Low
Compliance Handling	Manual	Automated
Reporting	Manual, tedious	One-click reports

Real Benefits SMEs Experience After Shifting to an HRIS 

Once they make the move from spreadsheets to an HRIS, many Sri Lankan small businesses are surprised by how quickly they feel the difference. Tasks that used to take hours (or even days) can now be completed in minutes, with far fewer errors and much less stress. 

Here are some of the key benefits SMEs experience almost immediately: 

• Faster Payroll Processing: Whether it’s for full-time staff or contract workers, payroll is generated with just one click. 

• Automatic Report Generation: T10s, C-Forms, and bank files are ready in minutes. 

• Error Reduction: Built-in calculations significantly cut down human mistakes. 

• Integrated Leave and Attendance: No more cross-checking spreadsheets and emails. 

• Better Compliance: EPF, ETF, and APIT calculations are automatically accurate and audit-ready. 

‘But I Just Need Payroll’. Start Small, Scale Later 

Still, many SMEs might hesitate to move forward because they feel they don’t need a full HR system yet. That’s perfectly alright. You can start with just payroll processing and add other modules later, like leave management, expense tracking, or employee loan management, as your needs evolve. 

One of our own clients, a growing online book and stationery retailer, began with just basic payroll for their 7 employees. As their team grew, they started using the other modules as well and now manage their full HR process with ease. With automation handling their day-to-day HR tasks, they’ve been able to focus more on expanding their business and customer base. 

So, you can stay in control when adopting HRIS software. You can pick only what you need, when you need it. 

So, Is It Time to Retire the Spreadsheet? 

If your spreadsheet is starting to feel more like a bottleneck than a tool, it might be time to reconsider. 

Running payroll manually every month doesn’t just waste time, it holds back your business’s ability to grow, stay compliant, and keep your team happy. Spreadsheets were a good starting point, but they weren’t built for where your business is heading. Upgrading your payroll process isn’t a luxury anymore, it’s a smart, necessary move toward efficiency and success. 

Take the first step, even if it’s just moving payroll off spreadsheets for now. Your future self (and your growing business) will thank you.  
 
If you’re an SME looking for an HRIS software, continue to our article ‘5 Things SMEs Must Look for in an HRIS Software’ for five key points to help you make the right choice. 

Reference:

Perera, H.M.K.L., & Seneviratne, T.M.S. (2023). An Empirical Study on Technology Adoption in SMEs in Sri Lanka. Asian Journal of Research in Computer Science.