Go online: payroll and payslips in the cloud

Technology has significantly improved the operational efficiency of companies. Nowhere is this technology more appreciated than in finance, but in particular payroll, where online payroll and e-payslips are driving up standards.

9 June 2016

Why go online?

Online and cloud technology have revolutionised systems – there’s no longer any need for companies to run special IT solutions, while upgrades are rolled out overnight without the need for a military operation to update every machine.

The greatest benefit has been to make the technology available to smaller companies – what is often referred to as the democratisation of technology. However, compliance remains a major concern for all businesses regardless of their size.

What's in it for me?

The benefits of running payroll online are the same as for any other function. Data is more easily gathered, interrogated and shared if necessary.

The system is always the latest version, it’s available 24/7 and you don’t have to rely on data entry or access to dusty physical records.

Less human intervention should also reduce error rates, which saves time – and therefore money – and improves compliance.

With the last tranches of employers approaching their staging date for automatic enrolment (AE), this is very much a live concern. There’s no more Mr Nice Guy from the Pensions Regulator (TPR), which is beginning to fine smaller firms more regularly for failings in their AE governance.

Paperless payslips

It may seem rather prosaic, but one of the greatest benefits of online payroll is the ability to produce electronic payslips (e-payslips) without a need to print them off or buy stamps.

These can be distributed directly to individuals’ email accounts or distributed via an employer portal without any worry they will be intercepted by nosey parkers or lost in the post.

Tracey Simpson, payroll manager at chartered accountants, Moore and Smalley, says there are many advantages to offering e-payslips as part of payroll. Access is instant, with current and archived payslips and P60s available via the internet 24 hours a day, 365 days a year, across computers, tablets and smart phones,” says Simpson.

Employees have a unique login and password to a secure website where their payslips are immediately available. They're also in full control of lost payslips or P60s.”

Safe and secure

Security will only be as good as the systems e-payslips are distributed on, but these have a distinct advantage over pieces of paper that can be sent to the wrong person. Simpson says security has been a paramount consideration in the design of the service they operate, with similar controls to online banking and all data being uploaded or downloaded being encrypted.

Liz Robins, managing partner of AS Robins, a payroll specialist running payrolls for many chartered accountants, encourages the use of e-payslips, because they are password protected and can be distributed directly to the individual employee’s email account.

That doesn’t always remove all the obstacles,” says Robins, “for while there are savings on postage, the biggest problem is still data and anything up to one out of 10 email addresses incorrect.”

You can’t please everyone

Employees do generally expect to be able to view their payslip online – and preferably on their smartphone – but many older workers are less keen, says Robins.

Many worry if they don’t have a paper payslip, they won’t be able to use as for evidence when applying for a mortgage or other loan,” she says.

“While this used to be a problem some years ago, it really should not be these days.” Robins continues.

Christopher Watt, business leader of the Payright service at PwC, has seen demand for e-payslips grow considerably in last few years. Now at least 70% of his clients want them not only for the UK, but across the world – even in territories in which there is a statutory requirement to provide paper payslips.

In multi-territory engagements, 100% of employers request the use of e-payslips, even if they run paper ones simultaneously.

Double payback

The demand for this medium for payslips also offers employers an excellent opportunity to engage their workers, says Watt. “People go to work to get paid and payroll is the fundamental transaction that the relationship between employer and employee is based upon,” says Watt. “The use of e-payslips can build a little more engagement.”

Companies are increasingly asking for their branding to be used on e-payslips and including bespoke explanations to ensure employees understands a change or a deduction in their pay.

This reaffirms their relationship and can be used as a way to engage with employees more fully.”

This is particularly important in light of auto enrolment, as the smallest employers approach their staging date, so they will need to communicate with their employees.

Better, not cheaper

Watt is convinced that more people read e-payslips than paper ones and though the evidence is anecdotal, there is a logic that can be seen to apply in other areas of finance and social media.

Employers should not see online payroll or e-payslips simply as a way of saving money, however. Though costs are reduced as postage is not required and there’s no need for buying and maintaining expensive machines that require equally expensive consumables, payroll services have seen a lot of downwards pressure on costs while being asked to do more and more complex work.

“This option is more secure for the employee, but needs to be robust from the employer’s point of view,” adds Watt, whose clients in recent years are focused not on the lowest price in providing payroll, as the quality of service – and particularly from the point of view of compliance – is paramount.

It shouldn’t be an excuse to look at reducing costs,” adds Watt, “as this impacts on other issues which are far more fundamental to providing payroll.”

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