Payroll During the Recession: How to Ensure a Successful Payroll Season?

The recession has already had a stark impact on UK businesses. Since its inception in 2022, it has severely slowed firms’ growth, both large and small, and forced them to adopt desperate cost-cutting measures.

The economic slowdown and the rising inflation have given a blow to HR and payroll operations within firms. Where the responsibilities of hiring, firing, and retaining employees have stunned HR professionals, consequent changes to payroll have left payroll teams confused and overwhelmed.

Like the pandemic, the recession is a key crisis for the UK government and plans are being made to revive the business sector. So, whether the country will see an employee-centred scheme, such as CJRS, once again is a question that only time will answer. But as the turmoil grows, accounting firms have a huge opportunity to mine in some extra cash by offering professional payroll services.

Payroll has historically been among the most despised services by accountants owing to complex calculations and compliance. But the picture has been changing gradually post the pandemic. Today, many growing accountancy practices have added payroll to their portfolio, albeit with the help of outsourced payroll providers UK, to attract new clients and earn higher profits.

The Vulnerabilities of Payroll in 2023

Since 2020, payroll has never been the same. Along with changed compliance and calculations, technology, too, played a crucial role in the evolution of the process. Today, payroll management encompasses several additional aspects than its pre-pandemic form.

In 2023, as the UK reels in recession, payroll is once again set for disruption. With corporations hiring and sacking employees rapidly, accountants find it difficult to keep track of the changes. If the magnitude of the recession persists or deepens, employers may cut existing pay packages or suspend medical benefits and other allowances. Some companies may also resort to changing payment cycles, causing more confusion and distress for accountants.

Meanwhile, cutting-edge technologies, such as cloud and AI, have become more necessary than ever. Besides the need to make processes efficient and hassle-free, accountants are looking at tech as a way to sustain competition and grow their practice. Therefore, striking a balance between providing the best services and improving tech while saving costs, increasing profits, and battling challenges has become essential.

The year 2022 also witnessed critical changes in the UK administration. In the coming financial year, payroll and tax laws are expected to undergo fresh changes under the new government. Therefore, payroll will be highly vulnerable in 2023, making it an ideal candidate for payroll outsourcing services.

Managing Payroll During the Recession

Payroll has never been a simple service. But in the face of the recession, payroll management is set to get even more challenging. To begin with, the accounting industry is already short of skilled resources. The employer-driven changes to payroll and the introduction of new schemes during the recession may only add to the difficulties of accountants.

Below are a few tips to help you manage payroll effectively during the recession so your practice can earn higher profits.

Focus on three things – Tech, tech, and tech!

Whether you are an enterprise-level accounting firm or a growing practice providing payroll services for small businesses, tech should be at the core of everything you do. Gone are the days when accounting and payroll were about paperwork. Paperless accounting is here and is more of a need than an amenity for modern accounting firms.

Cloud technology has already taken the business world by storm. The latest cloud-based payroll software not only helps accountants access client information anywhere, anytime, but also comes with built-in features that track changes to legislation and implement them automatically. This means you and your team need not manually track and implement each change, making the process hassle-free.

Artificial Intelligence, on the other hand, is equipped to analyse data and infer critical conclusions that can be instrumental in employee retention. With the help of AI, you can slide into the role of an advisor to your clients, helping them make significant employee decisions in the middle of the pandemic. This will increase your credibility and better position your firm in the market.

Apart from cloud and AI, technologies such as automation, blockchain, etc., can also be crucial to accountancy practices’ growth. So, if you want to recession-proof your practice and make your payroll profitable during this period, focus on one thing primarily – Tech!

Make communication a part of your routine

During the ongoing tough times, make communication your saviour. Your clients are likely considering changing their pay cycle during the recession or cutting employee pay or benefits by a certain percentage. As their accountant, you must be aware of these changes to manage their payroll efficiently.

So, irrespective of whether you handle payroll in-house or through a UK payroll outsourcing provider, make it a routine to communicate with your clients regularly. Ask them about the developments they are planning and their survival strategy during the recession. Even if they haven’t planned any changes, connect with them regularly to understand their pain points and how you can help. Be a friend to them and foster a healthy relationship. They may not need your help right now, but they will remember you when they need a helping hand in the future.

Let experts handle what you can’t

We agree – payroll is mundane and difficult. So, why not let experts take care of it?

While the recession looks like a challenge, it is actually an opportunity for practices to scale their services and attract new clients. With corporations laying off employees and making changes to the pay cycle, chances are that more businesses will look to partner with accountancy firms to manage their payroll. This is an ideal chance for accountants to cash in on the opportunity and create a new revenue stream for their firm.

But what if you are short of resources or do not have the expertise to take up the additional work? This is where payroll services for accountants come into the picture.

Outsourcing is widely used in the accounting industry to create capacity during peak seasons and deadline-based projects. While the world is indulged in letting go of employees, hiring an outsourced team to manage your workload can be highly beneficial during these times.

To begin with, payroll outsourcing helps save massive costs that are otherwise spent on recruitment and training, employee benefits, infrastructure, and so on. The outsourced professionals are well-versed with UK payroll legislation, have years of experience handling compliance, and understand the nuances of payroll. With outsourcing, you can easily add payroll to your service offerings and earn profits without indulging in the hassle of managing it in-house.

Summing Up

The recession may be a hard time for the UK business world, but it is up to accountants to turn the adversity into an opportunity. Pay attention to the everyday developments in the industry and communicate with clients to understand how your practice can help. Even if you don’t have enough business opportunities, use the period to build strong relationships with potential clients.

If your firm is struggling with capacity issues and doesn’t have enough bandwidth to take on work, let technology and payroll outsourcing services come to your rescue. Simply follow these basic tips and you shall be able to sail through the recession effectively.

To learn how technology and outsourcing can transform your practice, connect with one of our outsourcing experts today at +44 208-146-0808 or [email protected]. To learn more about our services, log on to Outsourced Accounting, Bookkeeping, and Payroll Services | QXAS UK.