Choosing to move payroll provider is always a big decision and not one that any finance team, HR department or payroll manager takes lightly. There is bound to be a certain amount of trepidation; after all, it can be a risk and is often a time-consuming process.
As we approach the end and start of the tax year deadline in early April, many businesses will see this as the ideal time to take the leap and start the tax year on a new payroll footing.
But before anything is decided, key stakeholders will be sitting down doing extensive market research and analysing the options available.
To simplify things, we've written this short piece highlighting four factors that ought to be considered before any decision is made.
In-house or outsourcing?
We've written about the in-house vs outsourcing conundrum before.
Each has its perks and you must identify what is best suited for you and your business's needs.
To help make the decision easier, try and think about the pain points you're currently facing. For example, if visibility and control over the payroll process is something you lack and you want to be allowed to make changes yourself, in-house payroll is likely to be the best way forward.
With in-house payroll, you become responsible for the whole payroll process—e.g. paying employees on time, calculations, submissions to HMRC and much, much more.
In many companies, particularly larger ones, a dedicated payroll team will exist to ensure that everything is done correctly. While this may be costly, the advantage of keeping everything in-house means that changes can be made quickly and the entire process is visible from start to finish.
For smaller companies, hiring a dedicated payroll professional may not be viable. Therefore, without the expertise or the time required to complete payroll in-house, outsourcing often seems the best alternative.
Using an external provider can have its advantages—time is freed up and people are able to focus on their core tasks. However, outsourcing can also lead to problems.
Many companies tend to use accountants or financial advisors rather than qualified payroll professionals. While a significant proportion diligently performs these duties, many will still be relying on outdated legacy systems that aren’t set up to deal with modern-day payroll obligations.
Choosing to outsource to a provider that does not regularly keep up to date with the latest legislation affecting payroll can have serious consequences. Errors can occur—e.g. employees may be under or overpaid, and, in a worst-case scenario, instances of non-compliance may arise which could lead to penalties from HMRC.
It is important to remember that in the in-house versus outsourcing debate the accountability of ensuring an accurate and compliant payroll will always lie with the employer, no matter who does the day-to-day input.
At PayFit, we like to think we offer the best of both worlds: in-house payroll but with all the perks you'd normally associate with outsourcing.
Not only do we have a dedicated customer support team (including professionally qualified payroll specialists) but our cloud-based software also automates all calculations.
This means that even those with limited prior payroll experience can confidently use our app.
There are very few situations in life where we do not seek to understand the value of something we're paying for.
The last year in particular has highlighted the importance of setting and keeping a budget. For businesses, there is more pressure than ever before to ensure that spending represents value for money.
Most will have a company-wide budget that is split and then filtered down to individual departments.
For some, it may sound a little surprising, but not all companies have a budget when it comes to processing payroll. Often, payroll is combined with other business functions—e.g. payroll with accountancy. In situations such as this, the cost of its administration becomes diluted and unclear.
The price of running payroll can vary considerably depending on who you choose to work with. Some payroll bureaus can be very inexpensive, but the service provided can often reflect this. Equally, using accountants can be expensive and often without justification.
Specialised payroll software can provide a happy medium. Furthermore, the price is usually transparent and without any hidden fees or costs.
Price is always important and we are conscious that different companies have different needs.
At PayFit, we offer two different price points for our customers, depending on their size.
Smaller companies—those with fewer than 80 employees—will have a fixed cost starting at £49 per month plus an additional cost per payslip.
Larger companies with 80 or more employees will have a fixed cost of £99 per month, plus an additional cost per payslip.
With PayFit, there are never any hidden or additional fees.
The coronavirus pandemic demonstrated just how complex payroll can be and how companies need to react to changes to keep their employees paid on time and correctly.
Furlough calculations, not to mention changes to Statutory Sick Pay (SSP), left even the most experienced payrollers scratching their heads.
So, when looking to choose a payroll provider, you must identify the areas you know you will need support with.
For example, if calculations have proved a stumbling block over the last twelve months, or if HMRC submissions take up a lot of your time, it is a good idea to find a provider that can help support you with those specific issues.
We understand how challenging payroll can be and we know that payroll administration can be a stressful process.
One of our fundamental goals is to remove any anxiety you may have and support you whenever you feel you need it.
Thanks to our dedicated account managers, we are always available to provide answers to even the most complex payroll problems. They work alongside qualified payroll professionals who spend considerable time analysing the latest legislative changes affecting payroll to ensure that our software remains compliant at all times.
Some companies have what they call "stand-alone" payroll departments; however, the reality is that payroll is never a stand-alone process.
Without direct links to HR and finance and third parties such as HMRC or pension providers, running payroll would be a difficult, if not impossible, task.
Companies will often use different software for different departments; however, this often comes with the need for manual data input. This is not only a time-consuming and laborious task, but it can also be open to human error.
Integration allows for one software to talk to another while removing the need for manual input or data manipulation. It is considered a fundamental expectation for most companies looking to switch their payroll provider.
Our software has its own payroll, HRIS and expenses platform. This means that integration starts within the PayFit app itself.
Nevertheless, we know from our current customers that their processes and company setup means that they can often use different software, particularly for finance and HR duties.
At PayFit, we want your payroll processes to be as pain-free and efficient as possible and therefore offer compatibility with the most popular HR software in the market such as Hibob, BambooHR or Personio.
You can also benefit from our current integrations and support, such as:
HMRC - We process tax codes and student loan changes directly from your HMRC account to the PayFit app. We will also process your Real Time Information (RTI) reports on your behalf.
Accounting software - We have journal templates for many of the most popular accounting software (Xero, Sage, Quickbooks and Netsuite). These can be exported from the PayFit app and imported directly to your accounting software.
Pensions - For most automatic enrolment schemes, we will submit your pension report on your behalf.
If you're unhappy with your current payroll processes and feel like a change is needed, why not get in touch with us today? One of our product experts would be more than happy to run through the product and explain how we can simplify your company's payroll.