Are there still businesses out there doing their wages and salaries manually? Well yes, according to accounts and payroll software companies. Seemingly, there are people who still prefer the solid clack/thunk of a typewriter, the reassuring tradition of a handwritten ledger — and brown paper packages tied up with string.
In business terms, it’s daft. There certainly was a time when specialist payroll clerks were the expensive prima donnas in Accounts, the only ones who understood all the P-mysteries — PAYE and PRSI, P45s and P60s, and so on. But the wonderful combination of the PC and easy to use payroll software changed that scene forever. Today, even the boss can manage the payroll — or at least that is the theory! It is easier, cheaper and more accurate.
Make it easy
Ease of use is the top priority for most firms because a payroll may be as frequent as weekly. Fortunately, payroll software has hugely simplified and speeded up the whole process, transforming it into a frequently occasional, part-time task.
You want the system to be as automatic as possible? Feed in the employee’s vital statistics, like start date and basic salary, attendance and hours worked, etc, then cross with the (complex) rules of the Revenue and Social Welfare and the software takes care of the specialised application of PRSI and tax rules and relevant calculations. Out spits a neat Payroll Advice Slip in minutes at the end of the process. It then looks after the actual payment of the money, by electronic funds transfer or cheque — or can alternatively issue a list of employees and corresponding amounts for manual payment.
It actually is very nearly as simple as that. Most packages install and work straight out of the box. There are varying degrees of sophistication, of course, so it is important to look through the detailed specifications when making a choice — especially if your particular business has any specific requirements.
Nevertheless, any payroll package is designed to satisfy the common requirements of the employee, the company and the Revenue. It will look after the calculation, deduction and recording of Income Tax, PRSI and pension contributions. It will also calculate and print the P45 statement of deductions paid for someone leaving and the end of year P60 return for every employee, as well as the monthly P30 and end-of-year P35 summaries of everything deducted and paid over.
But be warned that apparently simple elements can in fact be tricky. Many companies pay some people weekly and others monthly while fortnightly payments (as a mid-month advance or fully worked out) or a 13-‘month’ year are not uncommon. Even more common are additional pay elements such as bonuses, commission or profit share that could arise at any time and involve recalculation of employees’ and employer’s tax and other liabilities.
Electronic credit transfer may be where payment is heading generally, but cheque and even cash payment will be with us for quite a while yet. Good security is essential, both to protect individual privacy and guard against fraud. There will also be tight security in electronically authorising payments by your bank.
An increasingly important area is voluntary deductions that the company looks after as a service to its staff. Mortgage, VHI and union subs are the commonest, plus pension plans of all kinds, while other frequent requests are payments to different bank accounts (Split Net Pay) — perhaps current and loan accounts, or to the account of a separated spouse — or to savings or share purchase schemes. A new element is Personal Retirement Savings Accounts (PRSAs), a recently announced Government provision that pension deductions will become mandatory for all employers — even those with just a single employee. The detailed guidelines are currently in preparation but it is expected that the scheme will come into effect early next year.
It is essential to check that a payroll package can do all of these things for you and your employees. Naturally, it should also collate all of the deductions for onward payment to the various destinations. Once again, the trend is towards electronic payments and even electronic dealing with the Revenue Commissioners through the Revenue Online Service (www.ros.ie). The details of how this can work are outside of the scope of this article, but it seems sensible that most SMEs would wish their payroll software to be capable of automatically managing both e-transactions and traditional paperwork — and cheque writing.
Key updates
Because the regulations change from time to time, the software has to be updated annually. In some tax years the changes involve little more than changes in contribution or tax rates and allowances and could perhaps be done by the users. But on other occasions — notably last year’s short nine-month tax year and the change to the new tax credits system — there were major implications.
For the business, the comforting guarantee is that these elements will be taken care of, completely and accurately by the software vendor. The Irish market contains a range of vendors, they are all highly reputable and most users will agree that the costs represent the best value available in IT. As well as the initial investment you pay an annual upgrade fee, naturally enough, and will want to check the likely level as part of your ongoing costs. It may not be a fixed cost or percentage but all payroll software companies will at least give you an estimate and tell you what their recent annual charges were.
Initial training is seldom more than half a day to a day and many users with computer-savvy accounts staff plunge right in without any formal induction. The costs vary from a few hours’ training included in the software price to normal IT training rates of a few hundred euro per day.
All of the payroll vendors offer generous telephone support with minimal restriction or quotas. Once again, this may be included in the initial purchase price (perhaps for a specific period) or be part of an annual maintenance charge that includes system upgrading as required. Pricing will relate to the level of the product used, from single user/single company all the way up to major groups with thousands of employees.
Products and prices
The payroll software market in Ireland is led by products from the companies that also produce the most widely used accounts software: Quickpay and Micropay from Sage and Easypay from Take Five. There are also payroll specialists like Intelligo, Thesaurus and Collsoft.
Sage offers its entry level QuickPay 3 product (up to three employees) as a free download from the Web with phone support for EUR95 a year, which is also both the purchase price and SageCover support charge for QuickPay 10, the next level up (ten employees max.) The Take Five Easypay range starts at EUR99 (single user, single company) with support through a chain of resellers around the country. Thesaurus is a well-established package that starts at EUR101.58, while newer market entrant Collsoft has a very simple charging model for its Small Business edition — EUR100 per annum, three companies and unlimited employees.
All payroll software gets more expensive as it is scaled up to multiple companies and larger employee numbers and — a tricky point for security and technical reasons — multi-user versions. It is fair to say that very few Irish SMEs would need to invest more than about EUR600-750 for the software and perhaps EUR300-500 annually for upgrades and telephone support.
Outsourcing to a bureau is a very attractive option for many companies. Convenience and transfer of the hassle is the primary reason with confidentiality a major reason for many bureau users. Costs are likely to be cheaper although perhaps not significantly so on a per-employee basis for smaller companies. The Carapay service from Carapeople (formerly part of the Cara Group) is the longest established national service.
Case study 1:
Leamore Transport
Leamore Transport and Warehousing is a Dublin-based logistics group serving the 32 counties with 30 trucks, 70 refrigerated trailers and a team of professional drivers. The company has 6,700 sq. metres of indoor racking and open storage and a state of the art computerised stock control system.
With over 90 permanent employees, Leamore recently upgraded its payroll software to Micropay from Sage Ireland.
‘We have three companies within the Leamore Group which makes payroll a very complex process,’ explains Paula Noblett, the group’s financial manager. ‘We have basic hours plus overtime, meals, overnights and back-loads, to mention just a few of the elements that have to be calculated, and we needed to integrate and streamline the process.’
Sage Micropay is a powerful Windows-based payroll system that addresses the needs of Irish SMEs, allowing them to define fixed and variable types of payment. ‘I’m very impressed with the features and options. All the fields are there and all I have to do is fill them in. It is very user-friendly and easy to use.’
Before starting to work with the software Paula Noblett attended a day course at the Sage Business Training Centre where the trainers programmed Micropay specifically for transport, taught her how to use the system and answered all her questions. But the follow through was also important and Leamore is impressed with Sage’s commitment to customer service. ‘When we were changing over to the euro and doing end of year in December, the Sage support team were there all the time, even on New Year’s Eve and New Year’s Day. They really understand how important it is that companies pay their employees on time and efficiently.’
Case study 2:
Armagh Planetarium
Opened in 1968, the Armagh Planetarium has expanded its exhibition areas over the years, added a café in 1994 and the Stardome, a touring inflatable planetarium, as part of its educational outreach programme in 2000.
With 45 employees on its payroll, the Planetarium’s management chose the Payroll Professional package from Sage after looking at a wide range of alternatives. It offers the range of features needed to cope with the great variety of staff types in a relatively small organisation, from research scientists and management to part-time and seasonal workers in the café and science park. Yet it makes it straightforward for the administration to comply fully with all the requirements of UK Government employment legislation and the Inland Revenue.
‘The benefits to the business and the time saved in a small finance department were immediately apparent,’ says company secretary Eamon Rafferty. ‘We have had very few technical problems and the telephone support has sorted out problems quickly and easily.’
Integration with the company’s account system, Sage Line 100, is naturally complete and automatic. This facilitates all management reports involving personnel-related expenditure and has proved, Mr Rafferty says, ‘effective and efficient in enhancing the trouble-free running of our business’.
Case study 3:
Eugene Carey & Company
This well-known Mallow, Co. Cork firm of solicitors has grown in just seven years to be one of the largest in the area with a staff of 15 including four solicitors, paralegals and administrators. As the firm grew, says office manager Nuala Murphy, manual payroll administration became a burden and the firm made the decision to outsource the Carapay service in early 1999.
‘The reasons were straightforward,’ says Ms Murphy. ‘Payroll is a very specialised area and there are more productive ways to use the time of our accounts people. Another major factor is confidentiality — everyone in the firm is paid on a merit and productivity basis, so it makes sense to have the administration done by a confidential bureau service.’
‘Absolutely all of our reports, monthly and annual returns, etc. are done by Carapeople. There have never been any problems — in fact it has been so smooth it’s almost scary — and I just fax the basic information once a week and it all happens.’ Fax may seem slightly low tech, but Nuala Murphy says it has just proved a simple way to keep a hard copy record, which is all the firms needs to do.
13/09/2002
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