Perfecting payroll

Pro

Your company is almost certainly using a payroll administration package already but it may well be time to review your options. Just as in our accounts software feature, we will have a look at some of the options and considerations. Smaller companies often start with
an entry-level payroll package then outgrow it as they expand, typically as employee numbers grow or as they form separate companies for different aspects of the business. In recent years our economic growth has seen SMEs, especially in retailing and services, food and catering, come to rely on a diverse range of employees.

‘I have three pubs, nearly 100 people working for me in every category of employment known to the Revenue – and eight nationalities at last count!’ says a Dublin suburban publican. He points out also that they range from family members and the accountant, several coming up to 30 years of service, lunchtime-only waitresses (several with nearly as many years of service) to students working a few hours in summer. This sort of employment pattern has become quite typical, with a high level of staff turnover adding to the complexity.

Now in fairness to entry-level products, they can all cope with the different categories and most of them offer a multi-company option as an upgrade if not standard. But payroll software has moved forward both in technology and design, just like other business
applications, and the latest versions and newer products offer appreciable gains in usability and productivity. If the payroll run takes just an hour or so rather than half a day, that’s a time gain that could repay the additional investment in a matter of months.

Secure communications
Broadly, the two areas of major advance are in communications and web enabling and in a greater richness of human resources (Personnel) features. Despite the fact that it comes down to money and has been traditionally looked after by the accounts people, payroll is really a HR function in business — salaries and bonuses, time worked and appropriate rates, applying Revenue and PRSI rules to employees’ personal circumstances, voluntary deductions and so on. The confidentiality aspect alone differentiates it from all other
financial information except, usually, company board level matters like profitability. So today’s smart payroll applications reflect all of that in tighter security (including encryption) and better ways of dealing with, for example, personal information like marital details and related payments, loan repayments, disciplinary matters like formal warnings, etc. On the business side, they offer better management information in areas like time and attendance – for example, accurate absence or lateness analysis by employee, department or location, all staff, seasonality, etc. All negotiations or disciplinary matters benefit from real and recorded information rather than fallible memories and impressions.

Communications might seem at first glance a bit removed from the payroll function, but think immediately of electronic banking and the monthly payment by employee details squirted down the line in seconds. Many more SMEs are coming to value the Revenue Online Service (ROS) and the facility to make all the P- returns (P30, P35, P60, etc.), VAT and VIES electronically soon becomes invaluable. Sending payslips to employees by e-mail is mutually convenient and quick in many businesses, either to work or personal e-mail addresses, while the trend towards ‘self service’ by staff that is sweeping through larger organisations is available and quite easily used by smaller businesses that have a LAN or a hosted website. Employees simply have password or PIN-protected access to their own details so that they can look up or check whatever they like — on-screen explanation of how tax and PRSI deductions have been calculated, history and cumulative totals, payslip
reprints, PRSAs, etc. Some companies may also offer the facility (and responsibility) to update personal details like addresses, contact numbers, etc. Even in very small businesses, it is very convenient for people to put directly on the system any requests for things like changes in voluntary deductions, copy certificates, confirmation of employment and earnings for banks, landlords, etc.

Budget changes
All payroll software needs its annual update as the Budget brings in changes in tax rates, PRSI rules, etc. Many software companies combine that with product upgrades, others effectively package the lot on an annual subscription basis. It is important that you have a
support service with your payroll software. Yes, it is generally very easy to set up and use but as the functionality develops — which is usually why a business moves up the scale — there are more issues that will vary from site to site and may generate queries or problems.

Bureau services are always an alternative payroll administration option for SMEs. Even our native giant in this area, Carapeople, has begun to offer an online service to SMEs while Compu-Pay is a smart online service and in many ways a smartly packaged version of a service that accountants and book-keeping bureaux around the country offer local clients. You can bet that those service companies in turn will smarten up and market their services based on the new generation of web-enabled payroll software products.

06/12/04

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