Once upon a time even the toughest credit controllers blanched at the thought of looking after the payroll run, and specialist payroll clerks could swagger around the accounts Office as the sole and indispensable guardians of all the P-mysteries—PAYE and PRSI, P45s and P60s and so on.
Now, even the boss could manage the payroll with a PC and easy to use payroll software—or at least that is the theory! It is certainly true that payroll administration without such a system is almost unthinkable today. Payroll software is now available for micro businesses and giant organizations with thousands of employees.
Many of them are stable companions of the better known accounts packages like Sage (QuickPay, Micropay) or modules of enterprise systems like PeopleSoft and Oracle Financials. But although Payroll is traditionally associated with accounts that is really only because it involves money and sums! Salaries and bonuses, hours worked, holidays, tax and other personal affairs of employees belong to the HR function, which is why there is a trend to align Payroll software with HR systems (belatedly, it could be argued) now that distributed computing means that the traditional link with accounts is not a determining factor. All payroll software will export financial information to all accounts software as required.
But another approach has actually been with us since the dawn of computing time—payroll bureau services. In Ireland that started almost 40 years ago with the computer department and mainframe in Aer Lingus setting up Cara to make a contribution to costs by selling on spare capacity. Its own payroll system, specially developed for Irish tax and social welfare, was the basis for the extremely successful first service. Many years later in 2003, its direct
successor Carapeople was acquired by Northgate HR, leading UK specialist in HR and payroll systems and services.
There are many reasons why an organisation would outsource its payroll operations, starting with the fact that it is by definition a routine task that is also specialist and mission critical. For SMEs or indeed any size of organisation, confidentiality is an important consideration in having it done out of house.
‘We have more than 200 accounts in Ireland with longstanding public-sector clients like RTE, health boards and hospitals, the financial sector—EBS, Anglo Irish, Bank of Scotland—but also commercial companies like Boots, Marks & Spencer and Ladbrokes,’
said Roddie Aherne, Carapeople Business Director. The health boards are its top client sector with more than 18,000 employees paid weekly, fortnightly and monthly. Yet it also has clients with just a few dozen employees.
‘This whole sector has become very functionally rich in recent years. For example it is becoming common for employees to have a self-service access to their own payroll files to look up payments made on their behalf, change personal details like phone number or
address, download copies of pay slips—or request online something that needs authorisation. Clearly this is time and labour saving for the employer and a fast, simple, confidential service for the employee.’ Even in industrial locations like a factory floor a touch-screen kiosk can provide the same access to workers who are not desk-based.
Another bureau service that has been steadily growing over the last eight years is Compu-Pay in Glanageary, Co. Dublin run by Martin Coleman. It provides an individually tailored service to 34 companies ranging from BUPA Ireland (250 staff) and The American Colleg (120) to a range of smaller businesses. ‘What really intimidates employers, especially smaller organisations, is the sheer range of variables,’ said Coleman. ‘People may be paid weekly, fortnightly or monthly, they may be permanent monthly or temporary, casual and possibly part-time as well. Deduction are a hugely variable element as well, starting with tax and PRSI. So outsourcing makes sense to many organizations.’
In fact, he adds, today’s smart payroll packages allow companies to do it for themselves and then decide that on balance it is better to have a trusted third party take responsibility and do the whole thing confidentially: ‘It’s by no means just proprietary directors that are
happier if their personal affairs are kept out of the office altogether.’
The normal procedure is that the service provider is given authority by the client to send net pay details directly to the bank for electronic payment to each employee’s bank account. The pay slips may be sent to the place of employment, by post to people’s homes
or by email to office or personal email addresses. Either employer or employee can easily obtain copies of records or special reports such as year-to-date payments or deductions. Clients will usually require cumulative reports, typically in spreadsheet form, after each payroll run showing all running totals eg to Revenue, VHI, etc.
The costs of a bureau payroll service are not an automatic ‘rate per head’ as the tasks involved vary so widely in type of employee and pay or staff turnover. Carapeople’s Roddie Aherne says that a fully outsourced service should save between 25 and 33 per cent of the
people, overheads and system costs of doing the same job internally. Martin Coleman simply says that Compu-Pay starts at €50 per month for simpler (rather than number of employees) payrolls and is based on initial assessment and monthly payment with
annual review.
10/01/05
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