Praise for Payroll: Celebrating National Payroll Week

Payroll experts are the unsung heroes of many companies. Still, they play a critical role in ensuring your business is compliant with tax and employment regula­tions – and that your cash flow is managed effec­tively. It is worth remem­bering that in most companies, employee salaries account for between 15 and 30% of expenses.

Your payroll team also plays an important role in increasing employee produc­tivity, loyalty, and engagement.

Are you sure you are giving your payroll teams enough attention and that they are fully supported to provide the most value to your business that they should have?

National Payroll Week 2024The event will take place from September 2nd to 6th and aims to recognize and celebrate the crucial role that payroll profes­sionals play in any organi­zation, partic­u­larly when it comes to ensuring that employees receive the right amount at the right time receive.

National Payroll Week is organized by the Chartered Institute of Payroll Profes­sionals (CIPP), the profes­sional associ­ation for payroll and pensions profes­sionals in the UK. With almost 10,000 members and over 15,000 profes­sionals with CIPP-recog­nized quali­fi­ca­tions in the UK, the organi­zation aims to raise the profile of payroll profes­sionals within organi­za­tions and ensure business leaders value their skills and contri­bu­tions.

How to create an effective payroll function

To ensure your payroll is effective, it is important that everyone in the department is aware of their respon­si­bil­ities and is fully trained and supported. For example, do you know who is specif­i­cally respon­sible for items such as data entry, payroll, overtime and bonus payments, tax regula­tions, and vacation and parental leave entitle­ments?

As technology evolves and regula­tions around wages, taxes and pension contri­bu­tions change frequently, it is important to review and update roles, respon­si­bil­ities and job descrip­tions.

You also need to ensure that your payroll teams receive regular training and profes­sional devel­opment. Those again CIPP can help here with Continuing Profes­sional Devel­opment (CPD) resources to ensure your payroll teams contin­ually learn new skills and techniques to grow in confi­dence and compe­tence.

A mistake many employers make is dividing their payroll functions. However, payroll affects many different aspects of your business and your employees’ working lives. This means you need to take a strategic, holistic approach.

One way to achieve this is to integrate it into your HR function. By synchro­nizing the two systems and their databases, repet­itive data entry can be avoided, reducing time, effort and the possi­bility of errors. Personal details, atten­dance, salaries, shifts, overtime, holiday entitle­ments, pension schemes, benefits and parental leave are all in one place.

How technology can improve payroll

Digital payslips replace tradi­tional paper payslips. According to CIPP’s 2023 Payslip Statistics Survey Report, 84% of respon­dents use a self-service platform to give employees instant access to payroll infor­mation.

Digital payroll technology can make paying and taxing your employees faster, more efficient and more accurate. In addition, payroll experts free up time for discus­sions with your teams. “The system does the manual, repet­itive work so I can chat with someone who is worried about their maternity leave or needs advice about a pay cut or their pension arrange­ments,” says a payroll manager.

Digital technology is essential for record keeping as it provides a detailed and accurate paper trail. Maintaining accurate and up-to-date data about your employees’ salary compo­nents and tax deduc­tions will keep you compliant and prepared for questions from HMRC and auditors.

Using cloud computing technology for payroll, rather than having all the software “on-site” in your office, can help reduce the cost of technology and make your systems more agile.

This means you can quickly and easily scale as your business grows and seamlessly upgrade to the latest versions of your operating systems.

The cloud also makes it easier and safer for your payroll teams to work from home or wherever suits them.

“Sage allows us to do payroll and accounting quickly and easily. This is very important to us as we are a small family business and are constantly rushing from one thing to the next. That’s why we need a quick and easy tool for accounting and payroll. Sage accounts have always helped us, but I remember when we used the old HMRC payroll and switching to Sage payroll saved so much time and effort it was incredible! “

Michael Fyfe, Gordon’s Bodyshop Ltd

Increas­ingly, artificial intel­li­gence (AI) is being used to answer simple employee payroll questions via chatbots and virtual agents. It can also identify anomalies to uncover possible errors and even fraud.

A quarter of all PAYE employees have been paid incor­rectly at least once, according to new PAYE research Global Payroll Associ­ation (GPA). The survey of 4,248 UK employees currently paid via PAYE found that when employees made mistakes, they were underpaid in 78% of cases, while overpaid in almost a fifth (19%).

Watch out for fraud on your payroll. According to the Global Payroll Associ­ation (GPA), payroll fraud costs companies an average of £40,000 each time. According to the GPA, theft through payroll is considered “misap­pro­pri­ation of assets.” At the same time, it is respon­sible for almost one in ten cases (9%) of asset misap­pro­pri­ation; no other type of asset misap­pro­pri­ation goes unnoticed longer, with each fraud taking an average of 18 months before it is discovered.

Use your payroll to communicate with your teams

The CIPP payroll statistics survey also shows that three-quarters of respon­dents do not use payroll to commu­nicate messages to employees other than topics such as pay and taxes.

Providing your teams with more infor­mation about their salaries can poten­tially answer many of the questions they would otherwise have to ask your employees in payroll. It can also help them make more informed decisions. They will be better able to think about pensions, parental leave, salary sacrifice and other aspects of their compen­sation.

The survey also found that half of respon­dents do not have tools to help their employees better under­stand their salaries. Only about a quarter (26%) have a self-service portal through which their payroll profes­sionals can commu­nicate with employees.

With the help of technology, you can keep your employees informed about tax issues, deduc­tions, pension contri­bu­tions, salary losses, and other topics using payroll commu­ni­ca­tions. Dashboards can present all of these payroll and tax elements in a way that is immedi­ately and easily acces­sible to your employees.

Above all, your payroll commu­ni­ca­tions should be regular, relevant and respectful – both ways.

Ensuring your payroll is compliant

To avoid the risk of fines and the cost and incon­ve­nience of uncov­ering and correcting errors, you must ensure your payroll is fully compliant. This is not a one-time, tick-box exercise. Payroll legis­lation changes regularly and it is important that you stay up to date with any changes.

Tax liabil­ities and Statutory Sick Pay (SSP), as well as employee rights such as holiday entitle­ments and parental leave benefits, may change, and these changes will affect how, when and how much you pay your employees.

Final thoughts on payroll

For many companies, payroll accounting fulfills an important but funda­men­tally simple function. However, by investing in new technology and staff training, as well as taking a strategic, holistic view, this often overlooked department has the potential to add signif­i­cantly more value to your business.

The best way to start this exciting journey is to take part in this year’s National Payroll Week and celebrate the contri­bution that payroll profes­sionals make to the UK economy.

“Sage Payroll makes life easier every month by submitting the liabil­ities we owe directly to HMRC, keeping employees up to date on their pay, sending payslips via email and easily importing the payroll details into our bank, so everyone gets paid on time.” We focus more on dealing with customers while knowing our financial needs are being taken care of in the background. For me personally, payroll is crucial. It gives me peace of mind that the date submitted to HMRC is correct, employees know what they are being paid and every­thing is done electron­i­cally so no one misses out.”

Philip May, Finance Director, FLETCHERS HARDWARE LTD