Small, growing companies in the UK often run into a spreadsheet-imposed ceiling on their growth. At some point, running payroll on Excel becomes unwieldy, and they hire outsourced services to help them manage the chaos.
However, outsourced service providers do not offer high levels of efficiency for fast-growing companies. Often, companies end up making the mistake of project-managing payroll, due to inflexible deadlines and a lack of direct access to payroll data. Changes to the workforce or employee statuses trigger rounds of back-and-forth emails, delaying submissions and exposing the company to penalties.
Let’s take a closer look at why growing UK companies opt for payroll software, along with how this option saves them money.
Reduce payroll processing costs
Small companies must keep a close eye on expenses. Unfortunately, this sometimes leads them to decisions that harm the business in the long run.
Indeed, outsourcing payroll helps companies bring expertise to that area cost-effectively. However, outsourcing also forces those companies to follow their payroll provider’s schedule. Most outsourced providers give their clients a rigid schedule and struggle to accommodate changes once deadlines pass.
For example, if a company changes employee statuses after the service provider’s deadline, they’ll have to either pay an additional amount for changes or risk a late filing with HMRC. Either way, last-minute changes cost money.
This lack of flexibility is unrealistic for growing companies that are hiring quickly and making changes to their employee base. Change is constant at growing businesses, and expecting companies to alter their hiring and expansion plans just because a payroll service provider cannot accommodate them is unrealistic.
Payroll software forces companies to bring payroll in-house, increasing HR costs. However, using the right software platform can also increase payroll management efficiency, so that the team member who oversees it can also include many other responsibilities in their role.
What’s more, the flexibility that this software offers can help them accommodate more changes and frees the business from having to adhere to payroll project schedules. As a result, companies avoid paying additional costs for flexibility and can make payroll subservient to the needs of the business, as it should be.
Avoid late filing penalties
Outsourcing payroll services gives companies a big advantage on paper. It helps them avoid late filing penalties, since the outsourced experts are well-versed in HMRC’s guidelines. However, reality tends to differ.
While outsourced service providers are knowledgeable, they serve multiple clients and have to adhere to strict schedules to ensure all of their needs are met. As a result, each individual client has to follow a prescribed path.
The slightest deviation from these timetables and workflows can cause disruption, starting the process all over again. The result is a late filing and the penalties that accompany them.
Businesses that have stable employee bases and individual business owners can rely on spreadsheets and outsourced services. However, fast-growing companies need a combination of flexibility and automation, both offered by software.
Automated filings save companies money by preventing late filing fees. Best of all, automation pulls data in real-time, so even last-minute changes are accounted for in filings, ensuring accuracy. Software therefore offers the best combination of flexibility and cost-savings in the long run for growing companies.
Keep payroll data organized
Growing companies have needs that static small businesses don’t. The former have to constantly project growth by running different financial scenarios, picking the best possible one.
Payroll data plays an important role here, since financial analysts use existing salary data to project future payroll expenses. In addition, analysts model different compensation scenarios to create a well-rounded picture of variable costs.
For instance, a company might be planning on expanding to another, low-cost location. However, that move might bring an additional regulatory burden that makes the move unsustainable, even if expenses are reduced.
Payroll data helps companies make this decision and model workforce hiring plans. Thanks to cloud syncs, software ensures that payroll data is up to date, offering financial planners a real-time view of the workforce. Conducting such analyses using an outsourced service provider’s exported spreadsheets is impossible.
Not only do those spreadsheets prevent flexibility, but their data might also be riddled with errors, costing companies significant money down the road. Payroll tools automatically pull relevant data and integrate it with different systems, ensuring companies have the best view of their position.
Ensure better information security
Data security is critical for modern companies, and outsourcing payroll data effectively puts a company’s most sensitive dataset in third-party hands.
While most outsourced providers have robust security controls, companies have no way of protecting their data optimally. They’re always dependent on the service provider. If the service provider suffers a breach, the situation is out of the company’s control, but it faces exposure to the incident anyway.
Payroll software runs on the cloud and adheres to the strictest security guidelines. Software providers update and patch their platforms regularly, ensuring top-notch security. In addition, companies can install their security programs and monitor activity for additional protection.
In short, payroll software protects company data as effectively as possible, preventing data breaches and the negative financial impact that comes with them.
Stay updated on the latest rules
Payroll professionals must keep pace with HMRC’s updates to rules and formulas. The regulator frequently publishes guidelines and doesn’t look kindly upon companies failing to adhere to them.
Payroll software simplifies this task by automatically recording and updating fields to conform to the latest rules. This way companies are always up to date, preventing wrong filings and the penalties that accompany them.
In comparison, outsourced payroll service providers manually keep pace with updates, creating a risk of them missing important announcements. While most service providers serve clients well, the risk remains.
Payroll software eliminates the financial risk associated with missing important guidelines.
Payroll software saves UK companies money
Growing companies in the UK have plenty of hurdles to deal with and don’t need a payroll challenge to go with them. Payroll software is the key to overcoming these challenges. While outsourcing might seem like a cheaper option in the short run, switching to payroll software is the best long-term choice.
