A director s guide How to choose a payroll solution An information guide from Access

Transcription

1 A director s guide How to choose a payroll solution An information guide from Access consulting software solutions

2 About this guide Don t worry about upsetting your suppliers. Try if possible, not to upset your customers. But never, ever, mess up the payroll! OK, so it s a bit of an exaggeration, but something in the adage rings true: make mistakes paying your staff, and you ve got a real problem on your hands. Compared to other areas of your business, payroll is often seen as a purely back office function, something that s just there. The problem with payroll is that people only notice it when it goes wrong! The purpose of this booklet is to help you realise that a good payroll system will do far more than pay your people on time. Correctly implemented, it will save you time, money and add value to other areas of the business. We do not aim to give a definitive answer to every question, or to recommend one approach over another. Rather, we want to clarify the key requirements of your ideal payroll system and highlight any pitfalls well in advance of any purchasing decisions. There are many software packages and bureau services out there, and only you can decide what is best for your business. We hope that this guide will help you streamline the selection process and ultimately, to enjoy easy, efficient and stress-free payroll processing. 1. What makes good payroll software? 2. What makes a good vendor? 3. Making your shortlist 4. In-house or outsourced? 5. Final checks & questions 1. What makes good payroll software? Quality marks One of the easiest ways to start your long list is to weed out suppliers who are not accredited by HMRC. Originally designed to help newly established companies and smaller employers to identify suitable PAYE and NI software, the HMRC scheme has rapidly expanded and now covers accreditation in just some of the following areas: Calculation of tax and National Insurance Handling of statutory records, credits and deductions Electronic exchange of IR PAYE returns & payments Customer service The payroll standard is updated regularly and all software packages that carry the HMRC logo are re-tested on an annual basis to varying degrees of accreditation. Payroll solutions that have received accreditation from HMRC are designed to comply with the legislation applicable at the time of their release. So choosing an HMRCaccredited solution ensures you will stay fully compliant with the latest legislation and adhere to recommended payroll routines. Electronic submissions In today s world, the ability to submit reports electronically is an essential part of any payroll system. Aside from being faster than traditional paperbased methods (and far less prone to errors), electronic systems are actively encouraged by the Inland Revenue. For example, cash incentives may be offered to companies who submit their Year End returns electronically. Whatever system you choose, ensure that a full range of forms are supported. Functionality Most accredited systems cover basic payroll procedures, so finding the functionality you need shouldn t be too difficult. Ensure SSP, SMP, SAP, SPP and all other statutory requirements are included and dealt with automatically. Check that the solution handles pensions in the way you need (as a fixed sum or percentage of salary) as well as the facility for Additional Voluntary Contributions. Good systems format PAYE, NIC and SSP tables in line with HMRC conventions and provide a monthly report of payments for PAYE and National Insurance. In addition, there is a range of additional functionality on offer that will help you run your payroll more efficiently. Think whether you will need to support two or more concurrent users, and whether the system can accommodate this. For more complex pay types, a flexible system is a must. For example, if you need to cater for combinations of weekly and monthly payees, pay staff quarterly or accommodate for annual fees for Non-Executive Directors. A system that allows you to cater for multiple pay types and deductions is essential if your business needs to accommodate schemes such as GAYE. Password-protected, electronic payslips are another key function for companies wanting a greener, safer and more cost-effective way to deliver pay information to employees. Payslips should be created in a standard format such as PDF and delivered using automation technology to free up time in the payroll department. This is just a selection of the key functionality offered by payroll vendors. For a full list, see the checklist at the end of this guide. Automation One of the greatest benefits of payroll software is its ability to carry out thousands of pay calculations automatically. As long as the basic information is entered correctly, the software will do the rest. All electronic systems should handle PAYE and NI correctly, but there are others you should check for see section 5. Reporting Any management team should be able to get on-demand access to business information and payroll is no different. A good system will also be able to integrate with other areas of the business such as HR and finance, providing visibility across your organisation. Consider how easily this information can be viewed the best vendors will enable you to view payroll information both at summary and detail level, using a range of simple search, sort and sub-total commands. 2 Access E&OE.

3 Another important consideration is the format today s vendors offer a huge range of innovative reporting methods, making information even more accessible than ever before. Ask, for example, whether you can see payroll reporting via online dashboards as well as all your traditional Crystal reports. Integration bringing data in Each time you run your payroll, data from a wide range of external sources may have to be input before processing can begin. A good payroll package makes it easy to gather information automatically from a wide range of sources and using a number of different formats. Consider for example, whether the system can receive data from timesheets (held in Excel for example) or specialist attendance applications such as clock card systems. The key to gathering this easily and cost-effectively is to choose a system built on an open database structure such Microsoft SQL Server. Integration sending data out A system that can share information held in your payroll with other applications is also an important requirement. One of the most important checks you can make is ensuring that the system will automatically post payroll analysis into your Nominal Ledger. Imagine how much time you could save by not having to re-key line upon line of information back into your central system! Insisting on this requirement will also ensure that your management team have the most accurate and up-to-date picture possible of all pay-related information. Ensure that the payroll analysis can be posted back at the level/s of detail you require and that this information is easy to extract and analyse. 2. What makes a good vendor? Getting the best from your payroll software provider is fundamental to the success of your investment. The following list shows what to look for. Track record Before meeting a vendor, try to find out some background information on the track record of both the product and the vendor. This might include their innovation ability, awards, years in the business and number of existing sites. Independent assessments are invaluable - ask a consultant for tips and advice. Online reviews also offer useful comparisons and unbiased opinions on the functionality, security and reliability of the payroll products available. Implementation process The main aim for any software provider is to get your payroll system up and running as quickly as possible while ensuring that every possible risk and benefit has been thoroughly considered. Advanced planning is critical and should involve a dedicated project manager. He or she will agree and plan a schedule for implementation, taking into account the time needed to transfer your existing data (with a proven procedure for maintaining its security and integrity) and to configure your system for maximum impact. A word about SQL This industry-standard technology enables data to be easily transferred between your existing applications, essential if you are looking to build a centralised business system. Other benefits include multi-level security (enabling you to prevent or allow access to different areas of your system) and an unlimited memory (enabling fast processing however many transactions you need to process). In addition, Microsoft SQL-Server based systems are designed to accommodate from one to many thousands of employees and to accommodate for fluctuating staff levels. All these are essential factors for a payroll system that will support you now and in the long-term. Consider also your HR requirements. An increasing number of software vendors are Configuration No two businesses want exactly the same from their payroll so good vendors need to be able to tailor their software to suit your needs. Skilled software developers should work closely with your project manager to ensure configuration proceeds to schedule and budget. Support Good systems are designed to lessen the learning curve as much as possible but there almost inevitably comes a time when you will need further assistance with your new payroll solution. How much help you need depends on your in-house payroll expertise and IT resources and your budget will also play a part. A vendor should offer a range of options to suit your needs, from onsite consultancy and training through to hotline telephone support. Remote access is another useful option since it enables the supplier to view and control your system as if it was in front of them, meaning you can easily identify and address specific issues. providing either their own fully integrated payroll & HR software, or payroll applications that can link with existing HR applications. It is easy to see why - HR and payroll are closely linked and ensuring each department only has to enter information once can bring significant time and cost savings. Take a new starter for example. Integration between the two systems will allow HR to submit these details to the payroll team, and for that information to update the payroll without duplication. Of course, it is essential that the system provides all the in-built checks to ensure this data is properly validated. If you are considering investing in a system to streamline your payroll processing, then it may also be an ideal opportunity to further increase efficiency and visibility business-wide. 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4 3. In-house or outsourced? When considering a payroll solution, you have several options. These include outsourcing your payroll to a service bureau and processing the payroll yourself using an in-house solution. There are compelling reasons for both, which we ve outlined here. It is highly likely that the path you choose depends on your size of business and the complexity of your payroll requirements. Payment In-house solutions typically require upfront payment along with an annual license charge while payroll bureaus charge usually on a monthly basis. With the latter, charging structures are based on the number of transactions required to run the payroll e.g. per timesheet and per employee. This can be a relatively cost-effective option for smaller companies maintaining regular and consistent payrolls. Those businesses with complex requirements may prefer their own in-house solution whereby changes to the payroll can be handled internally with no additional charge. It may also be seen as offering a more solid ROI, paying for itself in months or years. Expertise Handing your payroll information over to a bureau is an attractive option to companies who do not wish to maintain payroll competency in-house. However, gathering the information for the payroll run can be a full-time job in itself, so you may want to consider whether it is actually more costeffective to train your staff internally. Payroll calculations are complex but the raison d'être of any good system is to simplify this process so that it is easily manageable in-house. Data security Neither option should be a cause for concern on this front. Payroll bureaus have to meet strict security standards while in-house systems offer data encryption, enabling companies to protect information they consider private. Tax compliance Payroll bureaus do not accept responsibility for incorrect or late payroll data, so there is a level of responsibility required of your company whether the payroll is inhouse or outsourced. However, good in-house solutions will include automated tax tables to help you keep up-to-date with tax regulations and filing deadlines. Flexibility Bureaus require that you meet strict deadlines in order to make the payroll run, and will charge for late additions or amendments. In-house systems allow you to make lastminute changes just hours before running the payroll, meaning less time is spent correcting errors next time the payroll is run. This factor may prove decisive for larger businesses with complex needs and who require maximum control and flexibility. Integration A payroll solution with links to other areas of the business such as the accounts and HR has the advantage of keeping your central system in sync at all times. With an outsourced or non-linked system, this information has to be re-keyed which can be a drain internally as well as increasing the likelihood of error. However, some bureaus may offer integrated payroll and HR which enables you to share and report on common data. 4. Making your shortlist There are two excellent ways of establishing whether a payroll system is right for you. Firstly, ask your chosen vendors for full product demonstrations, simulating your own payroll requirements. This will enable you to assess the quality of the software and the level of expertise offered by the vendor s consultants. Secondly, ask the vendor for reference sites and/or detailed case studies. Find out if the software works for them, and if they would recommend it to you. 5. Final checks & questions Accreditation and upgrades Is your software fully HMRC accredited? How quickly are updates made available? Are upgrades issued automatically, or do you need to request them? Are updates part of the cost of an annual licence? Will there be any extra charges associated with upgrading? In which format are these updates supplied? Electronic submission Are basic forms supported e.g. P11D (b), P14, P35, P45 (parts 1 & 3) and P46? Which other forms are included? How quickly will new forms be incorporated? Functionality Does the software cater for my specific pay requirements? What other functions do you offer to help me run the payroll more efficiently? The following provides a useful checklist: Automatic calculation of all statutory requirements Ability to accommodate multiple concurrent users Unusual pay frequencies Unusual or multiple pay deduction types Mixed pay methods (including cash payments) Pension scheme administration On-screen previews of PAYE and NI calculations prior to final processing Error checking and exception reporting on processed pay, prior to pay day Analysis of pay expenses by department, pay type or combination 4 Access E&OE.

5 Electronic payslips Supplementary information e.g. company loans, BUPA membership Calculation of holiday entitlement, including one-off and increasing allocations (based on weeks/months worked) Calculation of holiday pay, based upon Standard or Average Pay Automation Does your software automate the following? Statutory Sick Pay (SSP): calculation & recovery of SSP payments Statutory Maternity Pay (SMP): tracking the qualifying week & calculating average NIC able earnings Pensions: COMP minimums & Net of Tax calculations Directors NI: Pro Rata Annual Earnings & alternative arrangements for assessing NIC Class 1a NIC: CO2 emissions information for company cars & worksheet format for interest free and low interest loans Summary of Deductions: for completion of P32 Employer s Payment Record Tax Credits Lower earnings Piece work (if applicable) Reporting Can I produce management reports using current and historical payroll data? What periods of analysis are available? (E.g. Weekly, Monthly, Quarterly, Annual, Year To Date). What categories of analysis are available? (e.g. Department, Job, Project, Employee, Pay (or deduction) type Can you create specific reports for me, if required? For example, combining any of the categories above? How are the reports displayed and formatted? (E.g. tables, graphs, Excel documents, web-based dashboards). Can I produce consolidated information from other areas of the business e.g. HR and finance? Inbound integration Can the system receive data from our existing attendance or timesheet application (e.g. Excel spreadsheets or clock card systems?) Can the system process data submitted by ? Do you offer an integrated HR application? Can the payroll link with it to receive data such as timesheets and new starter details, subject to full validation procedures? Who we are Access will give you the advice, tools and clarity you need to make effective decisions, quickly and with certainty. As both a business-focused consultancy and a specialist software developer, we combine our innovative software with practical experience to deliver a solution that s exactly right for you and your business. You can rely on us to provide you with a solution that s simple, proven and relevant to your company. We have over fifteen years experience of developing software here in the UK and our regional consultants have tailored and implemented this software all over the UK and Ireland. The expertise we ve gained gives us an unbeatable ability to accurately assess your needs and deliver maximum impact with ease and confidence. We believe your solution must be ready for the future, as well as right for today. Because your business will constantly evolve, we provide a software solution that grows with you. Our modular software covers a complete range of business, financial and administration processes and can be flexed to give you the precise view of your business that you need at any time. Our supportive consultants combine their first-class software expertise with in-depth industry knowledge to constantly improve and simplify your business processes so that your solution delivers maximum value and a continual return on investment. With Access, you can be sure you ve got the clarity you need to reach your business goals. Further information For further information on Access consultancy, software and solutions, please telephone us on , info@theaccessgroup.com or, alternatively, visit our website at consulting software solutions