Spotlight on payroll: more than making sure you get paid

They’re often the unsung heroes of a company but payroll would quickly step into the spotlight should wages not magically appear in employees’ bank accounts every month. Determined to raise the profile of this indispensible role is National Payroll Week, which this year takes place between 2nd and 6^th September.

Payroll has come a long way from when staff were handed weekly ‘pay packets’ – small, sealed brown envelopes filled with notes and coins. Although a minority of workers are still paid this way, the majority enjoy the luxury of an electronic transfer directly to their bank account. But with such a seamless transaction looking so effortless, how many of us stop to think what’s behind this vital payment we’ve come to rely on?

Firstly, it’s not as simple as setting up a few automated bank transfers. As well as salary, payroll is responsible for ensuring all tips, bonuses, statutory sick or maternity pay are accurately calculated and paid, and amounts to cover such things as student loans, pension contributions and travel loans are deducted.

In addition, one of the most important functions of payroll is to operate PAYE – HMRC’s system to collect Income Tax and National Insurance from employment – a sum expected to contribute in the region of £301 billion to the UK economy in 2019/20, according to the Office for Budget Responsibility.

As well as monthly and annual reporting to HMRC, payroll also need to tell revenue and customs when a new employee joins and if their circumstances change – if they reach state pension age or become a director, for example. There’s also the plethora of ‘P’ forms to understand and administer – end-of-tax-year P60s, P45s when employees leave and the P6 notification of a change to an employee’s tax code, among others.

As a result, today’s payroll is a tech-driven role as much as it is a numerical and HR one. There is a myriad of specialist payroll software in existence; even though most of us could probably only name Sage as one, and choosing the right software to suit a company is a major job in itself. In addition, an imminent decision among payroll managers is whether to migrate to cloud or app based payroll software, which comes with storage, accessibility and backup advantages.

Another of payroll’s newest and most pressing challenges is facilitating payment to the so-called ‘gig economy’ – a growing band of contract, freelance, self-employed and zero-hours workers who are sending in ad hoc invoices in a number of different ways. As well as the conventional Word doc emailed to accounts, bookkeeping software such as Freshbooks and QuickBooks needs assimilating with existing payroll set ups, while ‘bid’ sites such as Upwork are incorporating accounting aspects into their set-up, blurring the line between recruitment, project management and accounts.

An additional byproduct of payroll’s digitalisation and gig economy is the shift towards instant payments – moving payroll out of its monthly comfort zone towards transactions that may need to be made as frequently as hourly in some sectors – adding pressure on record-keeping skills and accuracy.

Artificial intelligence will play its part in making payroll departments more efficient in the light of a new style of working and an increased workload. Stopping short of a robot stepping in to do the job, automation will increasingly remind, cajole and prompt staff to submit payroll-applicable paperwork, notify payroll staff of tax code changes and even open chatbot dialogues with employees for non urgent requests.

It’s no surprise with such a complex and important role to play – and an ever-evolving software base – that employers are increasingly looking for payroll recruits who have specific qualifications. The Chartered Institute of Payroll Professionals (CIPP) and the International Association of Bookkeepers (IAB) both offer formal, recognised qualifications and to reflect the digitalisation of the role, there’s even a certificate and diploma in computerised payroll from the IAB.

If you are interested in working in payroll – or already hold a payroll position and would like to change jobs or pursue promotion – contact Bond Williams for specific advice and available finance positions.