Why Fast Payroll is Crucial for SMB's Success

As a small business owner, you know that time is money. Every minute you spend on administrative tasks is a minute you could be spending on growing your business. That's why running payroll accurately and on time is critical for your business's success. But payroll processing isn't just about saving time. It's also about maintaining compliance with labour laws and regulations, avoiding costly mistakes, and keeping team members happy.

Factors that Affect Payroll Speed

Several factors can affect the speed of payroll running, including:

Headcount: The larger the number of payslips, the longer the number of operations, especially if you pay benefits or bonuses.

Contracts: If you organise rotations, contracts such as zero-hours entitled to the 52-week average holiday pay can add complexity to payroll.

Expertise: It can slow down the process if your company lacks expertise in HR and payroll.

Manual processes: Manual operations like pay calculations and data entry require much effort and introduce errors.

System integration: Insufficient integration between payroll and other systems, such as HRMS and accounting software, can confuse and slow you down.

Employees' information: Approximative or incorrect information can cause delays or costly mistakes.

Compliance: Following and understanding all the HMRC updates can be challenging.

The Impact of Delayed Payroll

Delayed payroll can have severe consequences for your company.

Internal relationships: When you don't pay your workers on time, you risk damaging your relationship with them and losing their trust. Losing employees' faith in your management can decrease productivity, increase turnover, and negatively impact your bottom line.

Penalties: When running payroll late, you risk falling out of compliance with labour laws and regulations, which can result in hefty fines and legal fees.

Financial management: Any delay in salary payments indirectly impacts the accuracy of your financial reports since payroll data is often used to calculate and report other economic metrics.

Benefits of Fast Payroll

Fast payroll has numerous benefits for business owners.

Focus on revenue-generating activities: First and foremost, on-time payroll allows you to save time and focus on other essential aspects of your business. When administrative tasks are eliminated, you can focus on growth, such as marketing, sales, and customer service. Additionally, rapid payroll processing can help you maintain compliance with labour laws and regulations, reducing the risk of costly fines and legal fees.

Build trust among your team: When employees know they can count on you to pay them on time, they're more likely to be loyal and productive team members. This, in turn, can lead to increased job satisfaction and decreased turnover rates.

Cash-flow management: Staying up with payments helps manage your finances and avoid cash flow problems, as you can anticipate money outflows a long time in advance.

Tips for Improving Payroll Speed

If you're struggling with payroll, there are several things you can do to improve your speed and efficiency. Here are a few tips to get you started:

Automate payroll: Consider investing in payroll software that automates many of the time-consuming tasks, such as calculating PAYE taxes and NI deductions and generating payslips.

BACS payment: BACS payments are quick and efficient. They eliminate the need to record transactions manually.

Create a payroll schedule: Establish a list of tasks and reminders to stay on track and pay your employees on time.

Train your staff: Ensure everyone involved in your payroll, from HR to accounting, understands their role and responsibilities to avoid costly mistakes and improve your overall efficiency.

Opting for software

Choosing the right payroll software is critical for a business's success. There are several factors to consider when selecting a service, including cost, features, and ease of use. Here are a few things to keep in mind:

Price: Ensure you understand all the costs associated with a payroll solution, including setup, monthly, and transaction fees.

Features: Look for a solution that offers the extra features you need, such as benefits management, attachment orders, rotas, contract signatures, etc.

Ease of use: If you don't have a dedicated administrative team with deep expertise, pay special attention to the user-friendliness of your prospective solution.

Outsourcing Payroll Processing

Partially outsourcing payroll can be the right decision for small business owners who want to save time and improve their processing speed. When outsourcing payroll processing, you hire a third-party provider to handle all aspects of your payroll, from calculating taxes and deductions to distributing payslips, whereas you keep control of your business operations. However, outsourcing payroll processing can be expensive, with an average price of £11 per employee per month. Moreover, outsourcing payroll can reduce the transparency and control you have over your payroll process and lead to numerous back-and-forths with the outsourcing company when preparing payroll. Therefore, it's crucial to carefully weigh the costs and benefits before deciding.