How many times per day will you check engagement on your corporate social channels, or replies to your sales email address, or that your product-supporting IT systems are working correctly?
The answer to most of these will likely be every day, or even hourly. So why don’t organisations have the same approach when it comes to the critical business function of calculating and running payroll?
Whilst payroll is typically a monthly process, the data input which supports the end calculation happens every day, from holiday requests and sick days to time-logging and expenses.
And whilst those replies on the company’s Twitter account are enticing, smooth and functioning payroll processes are critical to the running of your business.
Employees rightfully expect to be paid accurately and on time, every time. However, mismanaged payroll, whether down to human error or erroneous data and outdated systems, can have severe negative consequences for any organisation – no matter how good their reputation may be to begin with.
An organisation that can’t keep its own house in order is rarely going to instil confidence in suppliers, customers, or its own people.
This can be exacerbated further if HMRC gets wind of ongoing payroll issues and launches an investigation that may end up in a fine, which in the case of paying beneath the minimum wage as an example, can run up to 200% the amount legally owned.
Investigations and fines of this nature regularly make the news and will linger long in people’s memories… and Google search results!
We’ve all likely heard tales of staff being paid a whole year’s salary in one month and no one noticing, or indeed an employee who quit a company but is still receiving their pay five years on.
These stories aren’t just amusing anecdotes – they reflect an issue which is costing organisations millions each year. In fact, one study puts the figure at £150,000 on average per UK business, with nine in 10 firms admitting they make payroll errors every month.
At FTSE 100 level, those errors are costing £30 million a year.
People have bills to pay that tend to centre around when their salaries are due to hit their accounts. When those payments are late or inaccurate for whatever reason, it can lead to unhappiness and even disengagement.
Employees need to have total trust that they will be paid accurately and on time for the work they do. If that regularly doesn’t happen, it can signal issues with the company at large and lead to a sense of insecurity in their role.
Unhappy, disengaged staff who don’t feel secure in the job are far more likely to look for a new position, and with Glassdoor estimating the cost of replacing an employee at £3,000, that’s a large hit your company could be taking purely because of ongoing payroll issues.
Lack of in-house resources and expertise, outdated systems, constantly-evolving legislation and human error are just some of the core reasons why payroll errors occur – and it’s something that we at Phase 3 work tirelessly to solve for our clients!
An estimated 38% of companies worldwide now outsource either part or all of their payroll functions to a specialist company.
Mitigating risk is a large part of that decision – especially surrounding data security, keeping up with the latest laws and legislation, and accessing the best technology.
Download now: Managed payroll vs. in-house teams – a guide to choosing the right model
And not only are these companies enjoying less internal stress and more accurate payroll outcomes, they’re potentially saving money too.
For smaller businesses in particular, the cost of hiring an experienced payroll clerk on around £25,000+ in the UK would far outweigh what it would cost to outsource that work to a specialist provider.
At Phase 3, we work with hundreds of companies every single day to ensure the smooth running of their payroll functions, going above and beyond simply ‘handling your payroll’ and acting as a true outsourced payroll department.
All our payroll services are delivered by expert consultants and we’re the Payroll Service Provider of the year according to the CIPP, so you know you’re in safe hands.
Learn more about our managed payroll services right here, and see how we can help alleviate the pressure – and errors – of running your own payroll processes.
Laura’s role as Head of Marketing sees her continually looking for new opportunities to tell the world how great Phase 3 is.
