Advantages of integrating HR and payroll software

Stephanie Coward of IRIS

Guest comment by Stephanie Coward

Despite payroll accuracy being such a priority, errors still occur on a large scale. According to a recent survey, 91% of businesses in the UK and Ireland admit to making payroll errors every month. While some are minor and easy to resolve, others are serious.

These can take significant time to fix and lead to penalties and interest charges from HMRC. As one survey reported, payroll errors can cost some businesses up to £150,000 a month.

These inaccuracies often are caused by data changes in the HR system not being reflected in payroll. With software integration, however, changes can be automatically reflected in both systems whenever employee information such as working patterns, pay rates or even bank details is amended – significantly reducing the risk of mistakes. All in all, combined HR and payroll software streamlines processes for payroll professionals and the wider workforce.

Here are some considerations to make when assessing your HR and payroll:

Look at the options around you

Review the marketplace, even if you are happy with your existing supplier. This will ensure you don’t overlook the unknowns and are up to date with the latest technologies and trends.

Engage with your supplier. Ask them to help you improve your payroll processes by replacing manual administration with automation or integrations.

Consider asking for further investment

The payroll process is an integral part of your business. Don’t be afraid to ask for further investment – either for your current payroll solution or for a replacement payroll solution. Analyse how the investment will deliver value and present the business case to decision-makers.

What about outsourcing?

For many, managed payroll services are highly affordable – with a fixed price per payslip. For those without a dedicated payroll team, managed services can reduce the pressure on overstretched finance and HR teams, and support compliance and timeliness more effectively.

Payroll is challenging at the best of times. At year-end, businesses need a lot of attention and resources to get the process right. For instance, they need to provide employees with their P60, process holidays over the transition, prepare for week 53, process leavers, send their final FPS, and submit their report to HMRC.

For those without enough resources, this can be a significant challenge. But an outsourced payroll team can manage year-end headaches, as well as providing other services such as automatic enrolment, digital payslip distribution, and advanced reporting. What’s more, an outsourced team can be there for you, 365 days of the year.

Bolster compliance

As every payroll professional knows, compliance is as complicated as it is important. Falling foul of regulations can be all too easy, especially when your business is growing, regulations are ever-changing, and staff shortages are ongoing. Unfortunately, HMRC can and does issue fines and penalties to non-compliant businesses.

On a day-to-day basis, there can be any number of compliance issues to bear in mind. For example, deducting the right amount of tax and National Insurance falls under the umbrella of compliance, as does the correct classification of employees. Also, payroll information – names, addresses, pensions, bank details, salary – is personal information. As a result, payroll teams need to ensure their processes are GDPR compliant.

At my company, IRIS, we think planning for future compliance is just as important as planning for today. This doesn’t just mean speculating what the next politician is going to announce. Instead, it means reviewing your growth plans, and seeing if any current legislation will affect you in the future.

For example, if you’re planning to hire talent overseas, then you will need a robust plan in place – as international payroll management is famously difficult, compliance-wise. Likewise, if you are planning to exceed 250 employees, then you need to have a plan in place to report your gender pay gap too.

To prioritise compliance, it’s wise for businesses to invest in tech solutions that support compliant processes, and a good idea to choose software that can perform a broad range of functions. For example, you could look for a tool that can bolster accuracy but also alert you if you are at risk of breaching the National Living Wage or GDPR best practice.

Stephanie Coward is Managing Director of HCM, IRIS Software Group