Believe it or not, not every business needs to use software to process their payroll. If your headcount is small enough and the calculations are fairly simple, it is entirely possible to process payroll manually. However, as your business starts to grow in size, employing more people, perhaps on different rates of pay and working patterns could cause even the most seasoned payroll professional, a serious headache. That’s where payroll software comes in handy, not only will it save you valuable time and money, but it will improve the accuracy of your payroll no end, saving you from any costly mistakes in pay.
In this post, we share five tell-tale signs that your business needs payroll software.
You’re processing payroll manually
While entirely doable, manually processing payroll for much more than 10 employees is likely to cause your payroll team a serious headache. Imagine processing payroll, calculating deductions, issuing payslips and instructing payments for hundreds of employees with just a calculator and a spreadsheet?!
In many UK businesses, payroll is handled by a finance or accounts team. If your team is bogged down in manual calculations, their professional expertise is hardly being put to good use. This team is much better placed to advise on financial strategy, budgeting and company spend; rather than wasting days every month calculating pay.
Your business is growing…fast!
Similarly, if your business is entering a period of rapid growth, an influx of employees can lead to mistakes in pay and a lot of manual lifting. Each new employee will have to be set up manually on both your payroll and HR system, salaries, days worked, and benefits will also need to be added. If your systems aren’t integrated, this means keying in this information manually…twice.
Integrated HR and payroll software mean once an employee is set up on your HR system, this information is securely relayed between both HR and payroll. This means that any changes to an employee’s bank details, rates of pay, bonuses or address is updated in both systems. As a result, you’ll always have one source of the truth, and costly mistakes in pay will be minimised.
Your employees work to different patterns and rates of pay
This is something that is commonplace in many manufacturing, retail and service businesses; employees work to different shift patterns, days, hours and even rates of pay. With payroll software, these variations are handled automatically per employee and you can rest assured that your employees are being paid on time, and free from errors.
Errors in pay are becoming commonplace
If you’re processing payroll using a spreadsheet before instructing payments manually, the likelihood of making an error is high.
We’re all human, mistyping a number, making a wrong calculation or deducting too much or too little tax is easy to do – particularly if you have a lot of employees to process.
With payroll software, you can be sure that your payment runs are made on time, and without errors. Most good providers will also issue payslips, produce P45s for departing employees, produce P60s at the end of the tax year and automatically file the correct documentation with HMRC.
You currently outsource your payroll
Research by YouGov in 2019 found that just 28% of UK businesses outsource their payroll to a third party. While outsourcing payroll seems the easy option, the cost per wage slip and time involved to generate hefty payroll reports to send to a third party can mean it becomes counterproductive.
External functions will often lump you with hefty setup costs and a recurring monthly fee depending on the number of employees and level of complexity your pay runs involve. Prices can often be upwards of £10-12 per wage slip. So, if you employ 300 people, your cost of processing payroll will be in excess of £3,500 per month.
When processing your payroll in-house, you can access more accurate data from HR, accounting and time and attendance systems. And an in-house HR and payroll system that is not only integrated but provides one single version of information for both your HR and finance/payroll departments can ensure little to no inaccuracies in pay.
Together with payroll software, your business will have significantly more control over your entire payroll process. From ensuring the security of sensitive employee data to controlling who is able to see salaries, benefits and bonuses; an in-house payroll process means you can keep all of your employees’ information private.