Payroll Processing – A waste of time and money?

By Anne Reilly, founder and CEO of PaycheckPlus
The biggest spend for most companies is their payroll.  It’s not surprising that payroll taxes account for more income to the Exchequer than VAT and Corporation Tax combined!  What is surprising is the number of companies that place the responsibility of their biggest spend with people not qualified to ensure its operating in the most cost effective way.  Why would companies engage accountants to take care of their Corporation Tax and yet ask an office administrator to manage their payroll?  The reason is that many business owners consider payroll as a back-office routine data processing function.  And they’re right!  But they forget that like any data, the need to understand what happens that data within the system is the critical part.

Payroll software is a wonderful tool.  It speeds up the processing and creates professional looking reports, payslips and so on.  But all too often, the output is dependent on the ability of the operator to know what needs to be done.  For example, the age of an employee can make a difference of 10.25% on PRSI to the employer and 4% to the employee.  Who wants to pay the Revenue Commissioners 14.25% more than they should?  Yet this scenario and many like it happens every day of the year by those untrained in payroll calculations and employment law?  Software cannot understand the implication of the personal circumstances of each employee.  It’s imperative that the operator knows how to manipulate the software to meet every situation.

Public holidays are another example of the importance of understanding the law regarding employee payments.  Many employers pay double time for every public holiday unaware that they may not have to pay that much.  The legislation regarding Public Holidays firstly requires that the part time employee works for at least 40 hours in the 5 weeks leading up to the Public Holiday.  Then the value of the payment for the public holiday depends on if the employee normally works on that given day (usually a Monday) or not.  If they do, then they are entitled to a normal days pay for that day, and any payment for actual hours worked.  If they don’t normally work that day they are entitled to one fifth of the average weeks’ pay over the preceding 13 weeks.  Yes, it’s a lot of calculations to do, but it can make a real difference to the payroll spend over the course of the year.

Over the past few years, we’ve noted that progressive companies recognise the value that engaging with payroll professionals makes to their bottom line.  The introduction of the taxation of illness benefit, calculations for Benefit-in-kind, Attachment of Earnings, SARP relief and share options demands a thorough knowledge of payroll legislation.  The introduction of Auto Enrolment and Real Time Information in the UK has resulted in a surge in demand for our UK services as employers recognise the time implications of meeting their payroll administration obligations.  Relying on software to understand the personal circumstances affecting a particular employee is dangerous.  Ignorance of the law is no excuse and penalties and fines can be significant.

It makes sense to engage with professionals when the spend and impact on the organisation is so critical.  Paying staff their wages is imperative to the overall success of an organisation.  Errors in employee pay can impact on customer service and subsequently on sales.  Working with a professional payroll company enables business owners and managers concentrate on core profit making activities without the worries of payroll calculations.  Many payroll providers offer payroll processing services.  Top tier payroll outsource providers recognises the importance of engaging only qualified and experienced staff.

Tailored services ensure that clients receive the service level that is most suited to their particular needs, at a time and price level that matches their requirements.  It also eliminates the need to ensure continuity training and cover for times when the payroll administrator is not available whether that’s through planned or more importantly, unplanned leave.

Successful companies recognise the benefits of ensuring valuable time and resources are dedicated in the most efficient way.  Asking the mechanic to prepare the cash flow may not be the best use of resources for a garage. Bringing the accountant into the warehouse for loading the trucks may not make financial sense.  It’s a case of using the right people for the relevant jobs.

What other tasks could you do if you didn’t have to process payroll?  What difference would that make to the overall efficiency of your department?  What value would that be to the organisation?  Would additional skills and knowledge of payroll make a difference to your business?

The best payroll outsource providers pride themselves in helping their clients understand what they need to know to meet their employer obligations without all the technical jargon.  Resources tailored to suit the individual needs of the client’s business ensures their employees are paid the right amount at the right time in the most cost effective way.

About the Author
Our clients outsource to PaycheckPlus for a number of reasons. Confidentiality is a big factor for a lot of companies.  Our ‘cleanroom payroll laboratory’ is the first of its kind in Ireland to ensure maximum data protection and confidentiality.
We understand the demands of the current business climate in Ireland and the UK. We save our clients time and money by providing a structured, cost effective and reliable payroll outsource service.  While enhancing and supporting any size of business, we meet the strictest compliance, security and confidentiality requirements for regulatory focused businesses. We excel in Irish and UK payroll calculations and employment legislation and bring real benefits to our clients in Ireland, UK and overseas.

We process payroll for companies across a range of sectors employing from one to several hundred employees working in Ireland or the UK.
Why not speak to PaycheckPlus to see how they can make a difference to your payroll spend?  Lo-call 1890 552 552 or +353 (0)41  686 3000 today or check out www.paycheckplus.ie for more information.

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