Why payroll automation is a must-have for small businesses

/ Posted By - Bradleys Accountants / Categories - Payroll

Now that we’ve entered a new financial year, it’s an ideal time for UK businesses to reevaluate and rejuvenate their payroll systems.

You see, with the ever-evolving landscape of financial regulations and the increasing demand for efficiency, the shift towards automating payroll processes has become more than a convenience—it’s of strategic importance.

Automating payroll reduces administrative burden, ensures compliance with HMRC regulations, and delivers better data security. Plus, it guarantees timely payments to all employees, whether they are contractors, temporary workers, or full-time staff.

Despite the clear benefits of automated processes, many businesses still cling to manual payroll systems, which are time-consuming and labour-intensive. There’s a clear case for supporting the function by incorporating the right tools — and in this piece, we’ll show you how.

The case for automated payroll systems for small businesses

New data from IRIS Software Group reveals several concerning trends about the UK payroll system. Research shows that 35% of UK workers have experienced late or incorrect payments—a massive issue impacting workforce morale and trust.

Furthermore, 20% of payroll teams still rely on spreadsheets or CSV files to manage payee data, a cumbersome method that can overwhelm even the most experienced.

Alarmingly, 10% use outdated .txt files, and nearly half of all payroll professionals (46%) still manually re-enter each payee’s information from their payroll solution into their payment provider platform or online banking facility, increasing the chance of inefficiencies.

This kind of data inputting and transferring wastes time and leaves a lot of scope for making errors. And payroll errors don’t just annoy the payee — in many cases, the payer could also be liable to pay fines for non-compliance.

By contrast, when payroll and HR systems are properly integrated, things like data transfer or information updates become a breeze.

Any changes (such as employee address updates) are automatically reflected in both systems, which cuts down on the time spent processing payments.

Modern payroll software also comes updated with the latest tax and National Insurance guidelines, ensuring you run a fully compliant payroll function. And, of course, when manual effort is reduced, payroll is much less stressful for everyone.

If you run your own business and handle payroll, investing in automation can make your life much easier! Let’s take a closer look at exactly how it can help you. But first, let’s start with the basics.

What is payroll automation?

Payroll automation refers to using designated software to handle payroll processes for maximum accuracy and efficiency. The technology streamlines various tasks, such as calculating wages, withholding taxes, processing payment deposits, and generating reports.

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    Payroll automation unlocked: Benefits of automated payroll systems

    As you can probably tell by now, there are several benefits to investing in payroll software. Let’s sum them up:

    1. Reduced payroll errors

    With automated software, the scope for making payroll mistakes is minimal. The tool automatically pulls relevant employee data and calculates overtime pay or deductions so that everyone is paid exactly what they are owed.

    For example, payroll automation can eliminate common calculation errors, such as misapplied overtime rates or missed deduction updates, often occurring in manual systems during the end-of-month rush.

    2. Significant time savings

    Investing in payroll software is one of the easiest ways for your business to free up hours previously spent on manual data entry and verification. Your HR staff can instead focus on strategic initiatives like employee engagement and retention.

    3. Accurate payroll calculations

    Payroll automation is designed to calculate every one’s full payment due. Thanks to the data collection and timekeeping features, payroll software will automatically prepare a final amount for each employee, including deductions, commissions, and the like.

    With payroll automation, you can calculate complex scenarios like mixed overtime rates or split shifts, reducing the workload on payroll departments.

    4. Predictable cash flow management

    With automated payroll, wages are deposited on time and directly into your employees’ bank accounts. This allows for better financial planning, as you always know when money goes out. Regular, predictable payroll expenditures help finance teams better manage budget forecasts and maintain tighter control over cash flow.

    5. Minimised need for extensive payroll staff

    Handling payroll manually would require a much bigger team to ensure every payment goes out accurately and on time. With a payroll automation process, this task becomes much easier and can be done with a smaller team, saving your business money.

    For instance, if you’re a small business, you can still manage payroll with just one part-time staff member using automation, compared to needing a full-time payroll team without such technology.

    6. Streamlined compliance with tax and employment laws

    As mentioned above, payroll software integrates the latest tax and national insurance laws, so you don’t need to worry about making any mistakes (and running foul of HMRC). Payroll software automatically adjusts to new tax rates and regulatory changes, minimising the risk of penalties for non-compliance, which can be financially burdensome.

    7. Greater employee satisfaction through reliable payment

    Everyone wants to feel like their workplace efforts are being valued. Paying them on time and in full is one of the best ways to do that. Consistently receiving payment on time improves employee trust and morale, often reflected in lower turnover rates and higher job satisfaction scores.

    8. Enhanced self-service for employee information updates

    Many leading payroll software platforms allow employees to log into their accounts and change personal information, such as bank details.

    They can also view their pay ‘stubs’ and see what deductions were made and whether they received the bonuses/overtime pay they were owed.

    By enabling employees to update their details directly, such as bank information or tax statuses, you can maintain more accurate data without the administrative bottleneck.

    Final words

    Payroll management is an activity that involves tight deadlines and fairly complex legislation. It’s only fair that the payroll automation process be smooth.

    Whether hiring payroll professionals or handling it yourself, automated payroll ensures that your employees are always paid accurately and on time. Be sure to research all the different options and choose the one that makes the most sense for your business needs.

    Bradleys Accountants offers comprehensive support to handle the demands of payroll management. Our expertise in navigating the complexities of PAYE, pension auto-enrolment, and payroll software allows businesses to offload the burden of payroll tasks.

    With our help, your business can secure a reliable automated payroll software that guarantees accuracy and timeliness in salary distributions, tax deductions, and compliance reporting.

    Moreover, our proactive approach to managing payroll includes regular updates and adjustments in response to legislative changes, which is critical for maintaining compliance with evolving tax laws and pension regulations.

    Our service extends beyond mere number crunching; it encompasses a strategic partnership that involves detailed record-keeping, precise gross pay calculations, and seamless integration with existing HR systems to facilitate BACS payments.

    When you work with us, your payroll team and employees will benefit immensely. Book a free consultation with us to find out more.

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