5 Payroll Challenges Accountants Are Facing and How to Overcome Them

Each year, income tax and National Insurance contributions raise billions of pounds for the UK government. Payroll might seem like a drag when you’re in the midst of it, but without the taxes deducted through payroll, we wouldn’t be able to fund our health system, schools, public transport or welfare systems (to name a few).

For your clients, payroll is a fundamental part of managing and growing their businesses, and for their employees, it’s their lifeline. When payroll is done right, clients can take it for granted. When there are issues with the payroll, it can lead to reputational damage, unhappy clients and upset employees. Whether you have 2 or 200 payroll clients, accountants all face the same challenges when it comes to payroll. In this article, we’ll be looking at five common payroll challenges faced by accountants, and how you can overcome them.

Challenge one: Spending too much time on payroll

One of the biggest challenges that accountants face is the amount of time they’re spending on providing their payroll services. Using outdated technology can slow down performance and make payroll a lot more manual than it needs to be. The more time that is wasted, the less profit there is to be made.

Offering payroll as a service is all about efficiency, and in today’s world, automation and integration are key to streamlining your practice’s workflow. Bright’s payroll software solution, BrightPay, includes a number of time-saving features that mean you can spend less time on payroll. Some of these time-saving features include:

• The ability to send payroll data to other platforms directly through the software, including HMRC, accounting software providers and pension platforms

• Pay employees, subcontractors and HMRC directly through the software

• Automated auto enrolment functionality/li>

• A batch processing feature where you can process all your static payrolls at once

• Integrated employer and employee platforms to distribute payslips, share payroll reports and much more

Challenge two: Undervaluing your payroll services

Accountants are always on the lookout for ways to make their practices more efficient and profitable. Payroll, while an essential service, is sometimes overlooked when it comes to increasing profitability. Many accountants say that they find payroll can take up a lot of their time, while not necessarily yielding the returns they would hope for.

Many practices undervalue the importance of payroll and can often undercharge for it; many accountants see it as a basic function, with no real value to clients. However, payroll is a fundamental part of running any business, and offering great payroll services and pricing them effectively can not only increase your profit margin but can also expand your client base.

Challenge three: Making sure employees are paid correctly

According to research from 2022, 91% of UK businesses admitted to making payroll errors every month, a scary figure! From speaking to our customers, we found that there is one main factor that contributes to errors in the payroll: human error. This includes errors made by the payroll processor but also mistakes made by the client, such as forgetting to tell you about a new starter. Below, are some of the ways payroll software, such as BrightPay, can help you avoid mistakes due to human error.

1. Make the client responsible for ensuring payroll information is correct

Whether it’s adding additions and deductions, new starter details, holiday allowances or tax codes, getting the client more involved in the payroll process means there is less chance of errors, and the onus is on the client to make sure that payroll information is correct. This could involve having an online platform where the client enters the payroll data themselves. If integrated with your payroll software, this information can then flow straight back to the payroll software, eliminating double entry of figures.

2. Get notified of tax code changes through your payroll software

When you use a payroll software that’s integrated with HMRC, you can be notified within the software when there are new coding notices to be applied to employees on the payroll. You can then easily apply the new tax codes.

3. Allow for last minute changes to employees’ pay with flexible payments

When you use a payment platform that is integrated with your payroll software and that uses the Faster Payments Service (FPS) scheme, it means you don’t need to upload any bank files. This eliminates the many frustrating steps traditionally associated with making Bacs payroll payments. Using an integrated payment platform means payments can be processed 24/7, 365, meaning you can make last-minute changes to the payroll, and quickly rectify any payment mistakes.

4. Automate auto-enrolment

Software that automates auto enrolment will constantly monitors employees’ auto enrolment eligibility in the background for you. On-screen alerts will notify you when you have pension duties to perform, meaning the correct pension deductions will be made.

Challenge four: Making sure employees are paid on time

While it’s important employees are paid the correct amount, it’s also important that they’re paid on time. Paying employees by credit transfer using the Bacs payment system means it can take up to three working days for employees to receive their wages. If you don’t get your bank files uploaded in time, it can lead to delays in your clients’ employees getting paid, especially if this happens just before the weekend.

With BrightPay’s integration with payment platform Modulr, you no longer need to worry about employees not being paid on time. The integration allows employees to be paid directly through the payroll software. Payments can be made at any time, on any day, even on weekends and bank holidays. Payments are processed in under 90 seconds, so there’s no waiting around for payments to land in employees’ bank accounts. You can also schedule payments in advance.

Challenge five: Staying compliant

Complying with payroll legislation is something payroll processers need to be vigilant about. Non-compliance with HMRC, GDPR or auto enrolment duties can not only result in fines but can damage the reputation of your business. That is why it’s important to choose a payroll software that helps you stay compliant in these areas.

• HMRC: As payroll processors know, you may be charged penalties if you don’t report the correct payroll information to HMRC or if you don’t submit the information on time. It’s necessary that you use a HMRC-recognised payroll software that can report PAYE information in real-time.

• GDPR: When processing payroll, you’re dealing with a lot of sensitive information. Using a GDPR compliant payroll software means you and your clients can rest assured that all personal data is stored and managed in a safe and secure manner. Using an online portal to share payslips and payroll reports with clients, means extra security for your clients’ data.

• Pensions: When auto enrolment duties are not complied with, employers can be faced with fines from The Pensions Regulator. Of course, sometimes payroll processers can make genuine mistakes when trying to keep up with auto enrolment and re-enrolment duties. Any mistakes however can be easily avoided when you use a payroll software that monitors employee eligibility and will notify you of any pension duties you need to perform.

BrightPay, along with its cloud extension, BrightPay Connect, has all the tools you need to make sure you stay compliant with GDPR, HMRC, and stay on top of your pension duties.

BrightPay’s cloud payroll solution

Bright recently launched its fully cloud-based payroll software. Using our cloud-based software comes with a whole host of features to make your life easier and help you overcome payroll challenges. So, what are the distinct advantages our new cloud payroll solution has over its desktop-based counterpart?

• It can be accessed from an internet browser. This means as many users as you like can access the payroll from any device, once they’ve got connection to the internet, no matter where they’re working from. This offers both you and your colleagues much more flexible accessibility to the payroll.

• With BrightPay’s cloud payroll solution, you don’t have to worry about installing the software on your PC and updating to the latest version. So, if HMRC announce changes to NI thresholds or auto enrolment regulations, you don’t have to worry about it – these updates will be made automatically within the software no action required.

• Multiple users can work on the same file simultaneously. Any updates to the payroll will be visible in real-time. You can see who is working on the payroll and what part of the file they are working on, creating a smooth line of sharing and communication.

Tackling payroll challenges head-on

Payroll can be a challenging part of accounting, but by understanding and staying on top of the five common problems discussed in this article, you can provide your clients with a reliable payroll service that creates peace of mind and better relationships. By addressing these challenges early, it makes it much simpler to resolve any issues that may arise. So, flex those payroll muscles, learn to anticipate issues before they arise, and enjoy the success of your payroll services!

This content may have been developed with the assistance of AI tools. Content is reviewed by a member of the Bright team before publication. Guidance on legislation can be obtained from your industry body.