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trends-in-payroll

Trends in Payroll: What Accountants Must Know

Payroll is fundamental to business. Contrary to a few years ago, payroll now involves much more than calculating an employee’s salary. It encompasses a great deal of detail, right from recording and maintaining employee data, onboarding staff, managing their salary, and completing exit formalities.

Payroll has evolved significantly over the last few years, thanks to the remarkable technological developments in the business and accounting world. With these developments and services, such as payroll outsourcing, becoming increasingly prominent across the globe, payroll is expected to grow even further.

A Trends market research report of 2022 revealed that the global payroll software market will grow at a CAGR of over 9% by 2025. This indicates the remarkable shift of payroll to tech-based solutions such as cloud computing and Artificial Intelligence (AI).

On this page, we will explore the latest trends in payroll, the role of technology in revolutionising it, its scope and significance, and the impact of complementing it with payroll outsourcing services.

Role of Technology in Payroll

Modern-day payroll management relies massively on technology. Gone are the days when HR professionals would maintain data on Excel sheets and calculate payroll manually. As businesses grow, they need a compatible, flexible, and hassle-free solution to manage employee information and compute and process payroll.

Additionally, many businesses, including accounting firms, resorted to remote work during the pandemic. As the remote and hybrid work models continue to dominate in the aftermath of the pandemic, the need for a robust payroll system with centralised data and easy access has become crucial.

Technology enables HR professionals to record and maintain employee data using modern payroll software accurately. It also helps payroll administrators to automate complex calculations and stay abreast of the changing legislation to minimise errors in payroll.

Considering the complexity of payroll, many accountants often refrain from adding it to their services. In fact, payroll has traditionally been viewed as a non-profit-making service. However, by outsourcing payroll services and implementing cutting-edge technology within their processes, accountants can add payroll to their offerings and profit from it.

Speaking of technology, there’s enormous scope for development in the accounting and payroll industries. While cloud computing has already revolutionised the function, companies are also examining the role of Artificial Intelligence (AI) and Robotic Process Automation (RPA) in making payroll more efficient and hassle-free.

Cloud-based Payroll

Cloud computing has grown to become an integral part of accounting. While many companies around the globe are already using the technology, it is expected to grow manifold in the coming years, fueled by the global pandemic.

Per a research report by Market Decipher, the cloud-based software market is projected to reach $13,137 million by 2028, growing at a CAGR of 6.8% between the forecast period of 2021 to 2028.

Cloud-based payroll simply refers to a centralised payroll management system that lets you access and control data easily from any part of the world with nothing but a computer connected to the internet. This technology is widely used by enterprise-level businesses, accounting firm giants, and leading outsourced payroll service providers.

Traditionally, payroll was a highly collaborative job, requiring multiple teams such as HR, payroll, and finance to work together ahead of the payday. While it still remains a combined task, teams do not have to interact physically within an office setup, thanks to cloud technology.

Cloud payroll systems allow employers to store all employee data at a single location for easy access, unlike legacy payroll systems. Therefore, teams located in any part of the world can access and manage data easily without any hassle. This is particularly ideal for organisations and accounting firms functioning remotely or on a hybrid basis.

Moreover, cloud payroll systems also help HR professionals onboard employees and conduct exit formalities remotely for a smooth employee experience.

Some of the striking benefits of switching to cloud payroll over traditional systems are:

 

With the evolving technology, payroll is changing rapidly. Additionally, legacy payroll systems are aging poorly, prompting companies and accounting firms to switch to cutting-edge solutions such as cloud payroll.

For small accountancy practices, the latest tech solutions yield the best results when paired with customised payroll outsourcing services from a reliable outsourcing firm.

Read more: Cloud-Based Payroll: The Game-Changing Technology Accountants Must Know

AI in Payroll

While digital technologies such as cloud computing and RPA have forever changed the payroll landscape, AI is no different. Many companies have already begun testing and using AI to power their processes, which is sure to be the next big thing in the payroll world.

Artificial Intelligence (AI) uses machine-based intelligence to perceive, infer, and analyse information. It helps automate crucial processes and minimise human intervention, thus making them more accurate, error-free, and efficient.

Apart from making the payroll process more efficient and hassle-free, AI also plays a significant role in helping organisations manage and retain employees. The technology aids HR professionals in analysing critical employee data and deducing inferences that can be critical to the latter’s growth.

Let’s explore some of the unique benefits of AI to organisations and UK payroll service providers.

Automation: The most popular advantage of Artificial Intelligence is its ability to automate processes. As discussed earlier, payroll is a cumbersome job involving a series of calculations and legislative considerations. With AI and machine learning, accounting firms can systemise these processes and make them more efficient and accurate.

Better Employee Management: Employee management is crucial but challenging in remote work. But with AI, this task can be made easy. For instance, mundane managerial tasks such as approving attendance and time sheets take up a lot of time. AI can help make the effort required to approve time more targeted, allowing managers and supervisors to focus on more important tasks.

Staff Retention: Organisations spend a lot of money, time, and effort on recruiting, training, and onboarding employees. Naturally, they then want to retain their best talent. Considering the current talent crisis in the accounting world, this also applies to accounting firms. This is where AI can be crucial.

AI and machine learning help HR professionals analyse employees’ skill sets, level of expertise, training, etc., and thus make vital decisions on fueling their growth. When employees see growth opportunities within an organisation, they are more likely to stay instead of leave.

Compliance: We know that payroll is highly dependent on compliance. Considering the magnitude of legislative changes pertaining to employee salaries, income tax, and other vital contributions over the last few years, it only makes sense to automate it. AI can be instrumental in tracking and applying these changes, thus saving firms from non-compliance.

Currently, AI technology is mainly used by enterprise-level organisations and top payroll providers UK. However, considering its growing scope and benefits to developing organisations, it is expected to become a prime candidate for organisations when choosing an accounting firm to partner with.

Thus, growth-focused accounting firms looking to attract new clients must be well-versed in AI technology and its applications.

Read more: AI in Payroll: A Futuristic Trend to Look Out For

Why and How to Outsource Payroll?

Let’s face it – payroll is boring. It has traditionally been looked at as a burdensome and unprofitable service. Many accountants even refrain from adding payroll to their service portfolio because of its complexities.

But what if we told you that payroll could actually be made profitable? In fact, payroll can earn significant profits for growing accountancy practices without accountants having to do it themselves. This is possible through outsourcing.

Outsourcing helps accounting firms transfer their payroll process to highly experienced and certified professionals. These professionals employ the latest trends in payroll processing to make it a hassle-free job. With payroll outsourcing, you can provide high-quality payroll services to your clients without investing time and effort in the calculations or understanding compliances in-house.

Why Outsource Payroll?

Outsourcing payroll offers a range of benefits to accounting firms. Let’s explore some of them below.

More profits: Contrary to popular belief, payroll can be a highly profitable service for accounting firms when outsourced to a reliable service provider. It opens a new revenue stream for firms and helps accountants easily attract new clients.

Hassle-free payroll: Payroll is a cumbersome job, but only until you spend hours after hours doing it in-house. Once you outsource it to experienced professionals, you need not worry about training your staff, staying abreast of the compliance changes, tracking technological developments, and more. Outsourced payroll providers ensure your payroll process is highly efficient and free of errors.

Latest technology: Another significant advantage of outsourcing, especially for small accountancy practices, is integrating the latest technology at nominal costs. With outsourcing, accountants need not invest time, effort, and additional costs into training employees, buying new computer systems, and arranging infrastructure.

Data security: In a world where accounting and finance firms are at huge cyber risks, outsourcing offers end-to-end data security. Top payroll outsourcing providers employ high-end security standards such as GDPR and ISO 27701 to provide clients with the best cybersecure experience.

How to Outsource Payroll?

Now that you are aware of the benefits of outsourcing payroll services, the key question remains – How should you outsource payroll?

Let’s understand the steps to outsourcing in detail.

Research: Research is critical to the process of outsourcing. Before you even decide to outsource your services, you need to research the trends in the accounting industry, the scope of outsourcing, and what your competitors are doing. Analyse your firm’s objectives and understand which services you need to outsource.

Choose an outsourcing provider: When outsourcing payroll, choosing the right outsourcing partner is of utmost importance. Once you finalise a firm to outsource to, half the job is already done.

But finding the right outsourcing partner isn’t as easy as it may seem. Once again, research is key to this process. Consider multiple UK payroll service providers and narrow down to the one that best suits your needs. Remember to conduct adequate due diligence before you sign the deal with them.

Set clear objectives: An outsourcing association functions best when the firms involved clearly understand their role and expectations. Therefore, before you onboard offshore resources to your team, set clear objectives with your partner firm and write them down. It is a good practice to include these in your Service Level Agreement (SLA) to be referred to at any time during the partnership.

Onboarding: The final step in the outsourcing process is efficiently onboarding your extended team. Whether you hire offshore or onshore resources, onboarding is crucial to facilitating a successful outsourcing partnership.

Read more: The Why and How of Payroll Outsourcing: A Complete Guide for Accountants

Payroll Outsourcing Cost Sheet

In the 19 years of functioning in the accounting industry, we have encountered one question repeatedly from accountants – How much does outsourcing cost?

There are multiple outsourcing providers in the market and each company prices its services differently. This depends on a number of factors, such as the credibility of the outsourcing firm, its industry exposure, the relevant experience and level of expertise of the resources hired, the engagement model chosen, and the duration of outsourcing.

Speaking of payroll, the cost of outsourcing depends on certain additional factors, such as the complexity of payroll and the volume of payslips to be processed. Top payroll outsourcing firms price their services primarily based on these factors.

Let’s break down the cost of outsourcing payroll services to a reputable firm such as QXAS in the UK.

Leading outsourcing firms providing payroll services charge clients on a per-payslip basis. Depending on the nature and complexity of payroll, the price could range between £1.30 to £3.00 per payslip. This includes the cost of payroll processing, Auto Enrolment pension setup, processing and upload, FPS/EPS/ year-end submissions, mid-period calculations for new starters, and much more.

In addition, outsourcing firms like QXAS also provide the Full-Time Employee (FTE) model for payroll outsourcing. The average cost of hiring one FTE resource ranges between £1,500 to £1,600 per month. Depending on the number of FTEs required and considering the nature and volume of work, an outsourcing provider may offer relevant discounts to clients with bulk demands.

When it comes to payroll processing, outsourcing offers a solid advantage in terms of cost savings as opposed to in-house hiring. Since in-house hiring involves huge recruitment costs coupled with overhead expenses such as training and development costs, employee benefits, and office infrastructure, outsourcing is a highly viable option, particularly for small and medium-sized accountancy firms.

Read more: Payroll Outsourcing Services in the UK: How Much Do They Cost?

Need Support with Payroll? Outsource to QXAS

With the trends in payroll constantly evolving, it is essential that accountancy practices adapt to the changes. Since technology and outsourcing are crucial to a practice’s success, accountants widely look for outsourcing support from top UK payroll service providers.

If you are looking for an outsourcing provider to delegate your payroll headaches too, QXAS is your one-stop destination.

A pioneer in global accounting outsourcing, QXAS specialises in dedicated payroll outsourcing services tailored to clients’ specific needs. We deal with global payroll, understand its nuances, and process requirements with the fastest turnaround times.

Since most accountancy practices in the UK are currently dealing with talent shortages, hiring skilled payroll specialists is extremely challenging. With QXAS, you get access to a vast pool of payroll professionals with diverse experience and expertise. Each of these professionals is trained in UK payroll compliance and stays abreast of the constant changes to it.

QXAS, the accounting outsourcing division of QX Global Group, has a vast experience of over 13 years serving accountancy firms of varied sizes and helping them scale in the competitive industry. Our payroll outsourcing solutions are powered by the tech of your choice. We also provide multiple engagement models, end-to-end data security, and compliance with all quality standards.

Why Work with QXAS?

  • Vast team of certified and highly experienced payroll professionals
  • Compliance with GDPR and ISO 27701 security standards
  • Fully compliant with ISO 27001 for information security and ISO 9001 for quality
  • Professionally affiliated with prestigious organisations like ICAEW and ACCA
  • 100% score in all BSI standard audits
  • Leader in IAOP’s 2022 Global Outsourcing 100 List for eight consecutive years

To discuss your practice’s payroll challenges and understand how outsourcing can help resolve them, book a free consultation with one of our outsourcing experts today. To learn more about our services, connect with us at +44 208-146-0808 or drop an email to [email protected].