Payroll is a big part of a company’s overheads and making sure that payroll is managed properly is very often underestimated.
The pandemic made many companies take a hard look at their sometimes-out-of-date processes, as their stability came into question and employee morale started to waiver. As a result, business owners, Finance Managers and HR advisors have had to look at changing their priorities.
Before Covid-19 over 50% of companies believed that their payroll was robust and more than 90% accurate. However, when the pandemic struck, this reduced to less than 30%.
The average cost of payroll for an established business is about 60% of their expenditure and out of this only about 40% of those costs are obvious, the rest are more obscure. It’s only possible to cut payroll costs if you know what you are spending, so it makes sense to take a real good look at your company’s payroll expenditure. Direct costs are easy to see and calculate, it’s the extra add-ons that make the difference, such as software upgrades each year, connectivity, workforce management, pay distribution and delivery.
Running payroll poorly can also affect a company’s ability to attract or retain the best people and in a highly competitive market – if you are vying for top drawer employees your payroll has to be seamless. Research has shown that an efficient, flexible well-run payroll has a massive impact on employee satisfaction which leads to better productivity and staff retention.
Also, many businesses fail to realise the value of using payroll data when they are developing their strategies to work smarter.
One of the biggest complaints is having to deal with far too many payroll queries and research has shown that over 40% of employees are often paid late, causing increased frustration and dissatisfaction.
The reduced cost of outsourcing payroll far outweighs the outdated thought that having in-house payroll is more efficient.
Outsourcing payroll does not only eliminate hidden expenses, it also substantially reduces companies’ direct payroll costs. By removing the cost of an in-house payroll administrator, as well as other expenses such as a workplace pensions, etc., associated with this role, you can, in most cases, lower your payroll costs by at least 50%. Furthermore, outsourcing offers the advantage of experienced professionals who are readily available to remove the uncertainty associated with running payroll efficiently and accurately, as well as reducing the time spent dealing with staff queries and HMRC requirements. The added provision of tailored reports also helps to develop best working practices, that can result in more effective, efficient business performance.