The 5-Point Guide for Umbrella Companies to Manage Payroll

The trend of umbrella companies in the UK has been on a tremendous rise over the last couple of years and is here to stay. Umbrella companies, acting as ‘middle-men’ for agencies and contractors, offer numerous benefits to both the sides, thus putting an end to several administrative and management woes. But one of the most challenging tasks managed by umbrella companies is payroll services, which needs effective planning and smooth execution. This is one of the reasons why payroll outsourcing services have been in great demand in the UK in recent years.

Umbrella companies function as legal employers for individual contractors working in the UK. Accordingly, they manage payroll for these contractors based on the PAYE regulations. Besides, these companies also offer payroll services to small business establishments run by contractors along with a range of employee benefits such as holiday pay, maternity and parental pay, as well as pension benefits. Therefore, umbrella companies often manage several payroll-related functions and may, at times, need external help with it.

Here is a 5-point guide for umbrella companies to effectively tackle their payroll woes and manage the task like a pro.

1. Time and resource management

It is a matter of fact that payroll is a complicated task and requires a great deal of time and human effort. Although technological innovation has made several bits of the process simpler, the tasks of keying in important values into the system and making certain calculations still largely remain manual. Therefore, it is important for umbrella companies to consider the amount of time and resources at their disposal before signing a new contractor and taking upon their payroll work.

Effective planning in this area is particularly important for umbrella companies for the following reasons.

• To ensure all contractors and their employees are paid on time
• To make the entire payroll process error-proof and hassle-free
• Building trust and reputation within the contractor circles

Thus, it is crucial for umbrella firms to conduct a time and resource analysis before signing a new contractor.

2. Managing payroll frequency

Several contractors as well as small-scale organisations pay their employees differently than other companies. While most companies stick to monthly pay, there are several others that need to pay their employees on a weekly or bi-monthly basis. When these organisations or contractors do not have the bandwidth to manage the payment cycles in-house, they often turn to umbrella companies or consider the option of payroll outsourcing services.

Here are a few tips to manage and cope with different payroll frequencies.

• Understanding the payment cycles of contractors and agencies in detail
• Considering factors such as time, resources, and processes crucial to payroll management
• Analysing the gaps in internal systems through a thorough audit
• Considering more structured approaches such as payroll outsourcing

An umbrella firm can ace its payroll responsibilities only when it thoroughly understands its contractors’ detailed needs and analyses its internal bandwidth.

3. Streamlining processes

Apart from having enough time and resources at hand, umbrella companies need to streamline their processes to effectively accommodate contractors’ diverse needs.

For instance, as discussed in the previous point, certain contractors or small-scale companies may require paying their employees on a bi-monthly or weekly basis. In order to accommodate these needs into their services, umbrella companies need to carefully understand and scrutinize the needs of contractors before signing them.

Here are a few tips to understand and streamline internal processes effectively.

• Conduct an external demand to internal supply assessment
• Consider the availability of resources to work on complex payroll needs
• Understand latest technology and strive to integrate it within your system
• Train staff on the use of latest software and servers
• Improve the company’s overall bandwidth to accommodate diverse payroll needs

4. Tackling technological woes

Technology has made several otherwise complicated processes simpler. But to keep abreast with the ever-changing technology and to learn its processes can be quite a task. In fact, several industries have been struggling to cope with technological advancements, train staff on the use of latest software and hire employees with latest technical expertise. This is one of the reasons why a large number of organisations, including umbrella companies, have been turning to payroll outsourcing as an alternative.

Following are a few reasons why battling technological woes is a must for umbrella companies.

• Contractors prefer to work with companies that are technologically sound and updated
• Latest technology and software help make processes simpler and quicker
• Technology saves valuable time and significant overhead costs
• Effective use of technology can help a company secure additional clients and scale effectively

Technology is the future of business in modern times. An optimum use of technology can work wonders for businesses, including umbrella companies.

5. Payroll Outsourcing Services

In the fast-paced world of today, where time and resource management as well as technological advancements are hard to keep up with when compared to the flow of work, outsourcing is one of the most effective solutions.

Here are a few ways in which payroll outsourcing can benefit umbrella companies.

• Outsourcing is massively time and cost efficient
• Outsourcing saves umbrella companies the trouble to recruit and train staff
• Outsourcing brings about the usage of latest technology into crucial processes
• With outsourcing, umbrella companies can scale effortlessly
• The amount saved with outsourcing can be utilized to add supplemental services to a company’s portfolio

Therefore, outsourcing is one the most idyllic solutions for umbrella companies providing payroll services for small business establishments and individual contractors.

Customized payroll outsourcing services for umbrella companies

QXAS is a pioneer payroll outsourcing partner providing customised solutions for umbrella companies in the UK. With a demonstrated experience of 12+ years in payroll outsourcing services, QXAS has served several small and mid-sized accounting practices as well as umbrella companies across various geographies. Our solutions are expertly customised to the need of our clients by our dedicated team of 400+ accountants and payroll experts. These professionals work exclusively on your schedule and software, albeit remotely, and are available for dedicated support at all times. With QXAS, umbrella companies can be assured of end-to-end payroll assistance, which is crucial for massive savings and quick scaling.

QXAS is India’s first GDPR compliant accounts outsourcing company in India and is affiliated with prestigious accountancy organisations like ICAEW and ACCA. We are also fully compliant with ISO 27001 for information security and ISO 9001 for quality, thus vouching for our unparalleled expertise in the payroll outsourcing sector.

To learn more about our services, give us a call on 0870 803 1033, drop an email at [email protected], or log on to Outsourced Accounting, Bookkeeping, and Payroll Services | QXAS UK (qxaccounting.com).