How to make payday a yay day

Managing the costs of a small business is never easy. Budgets are tight, profit margins are small, and there are many expenses that need to be paid.

One of the biggest expenses also happens to be the most important: payroll.

In this article, we explore how you can make this process simpler and keep the stress at bay.

We cover the following:

• Why you need to get payroll right
• Master the pay run with these 5 tips
• Top payroll software features to look out for
• Final thoughts

Why you need to get payroll right

Running a business means you have many plates to spin.

It sometimes feels impossible to know what should be prioritized. But at the end of the day, your business depends on people, and those people work to be paid.

It’s not that payroll should be your main focus (that wouldn’t be practical), but you should never neglect it. And you should take every opportunity to improve it.

Here’s why.

Payroll processes affect livelihoods

That isn’t an over exaggeration. Your people have bills to pay and families to feed.

Late or inaccurate payment of their wages can land them in financial trouble. Especially in these tough times where the cost of living is high.

This could not only harm their mental health, but most will not tolerate it; good, talented employees could leave the company and in extreme cases seek legal action.

You have a reputation to protect

We live in a world built on reputation.

Job seekers can ask their friends, colleagues, social networks, and review sites to get an idea of what a company is like to work for.

If payment mistakes happen a lot in your organization, your reputation will certainly take a hit. You might end up missing out on top talent, not to mention struggle to retain your best employees.

Compliance is vital

HMRC has strict regulations around payroll that all UK businesses must comply with.

If mistakes are causing you to make incorrect tax and National Insurance deductions or you fail to report pay to HMRC, you may face penalties.

Payroll teams are under pressure

Even if your business is just starting out, the person or team in charge of payroll may still be under pressure. It’s a huge responsibility to get the pay run right, both from the point of view of employees and HMRC.

Not only that, but it’s not always a straightforward task.

You likely have people on different hours and salaries, maybe even with different benefits. Then there are pensions, student loans, bonuses, and expense reimbursements to consider.

The more friction you can remove from the payroll process, the more efficient it will become and the less pressure your finance team will face.

Master the pay run with these 5 tips

So, what practical actions can you take to maximize the chance of an efficient, accurate, and stress-free pay run?

Implement these five tips and your payroll team (and employees) will thank you.

1. Start the process early

Rushing is the fastest way to making payroll mistakes.

You need to establish a robust pay day schedule at a frequency that works for your business. That could be weekly, fortnightly, or monthly, depending on your expected cash flow.

Not only is this important from an operational point of view (helping the payroll team maintain consistency), but also from an employee experience point of view (as people know when to expect money in their bank account).

Once you have this, you need to arrange the payroll process to start early enough so your team can take their time, get it right, and ensure staff are paid correctly.

This will also help them solve any challenges that may crop up without causing delays to payment.

2. Keep details up to date

Without the right information, you can’t run payroll accurately.

Make sure you regularly remind your people to provide updates to bank details and addresses, and ensure the team has the tax codes and any other payroll data they need.

Also, create a reliable way of collecting this information as part of your onboarding process. That way, when someone new joins the business, you can capture their details easily and in time to make the next pay run.

3. Make sure there’s enough cash

Payroll should be a high priority when you’re analyzing cash flow. The last thing you want to do is delay or fail to pay wages because you simply don’t have the cash to do so.

Managing cash flow is an art, and you’ll need to make decisions based on projected operational costs.

Though payroll will vary each time, you’ll be able to predict the amount with reasonable accuracy, since you know the salaries of your employees.

4. Help employees understand their payslips

It’s important that your people fully understand how they’re being compensated and the meaning behind the fields found on their payslip.

This is because, when it comes to things like salary negotiations and promotions, you want both parties to be happy with how much is being paid.

When it comes to understanding payslips, ask your payroll team to offer a training session to bring everyone up to speed on what each section of their payslip means.

This includes their salary, deductions, pension contributions, tax codes, etc.

5. Use payroll software

When it comes to the complexities of nailing an accurate pay run, nothing will make the process easier than a quality cloud payroll software solution.

The entire process—from storing employee details, scheduling regular salary payments and filing pensions, to generating payslips and P60s, and meeting HMRC regulations—can be done faster and with fewer mistakes.

This makes the work far less stressful for your payroll team, while ensuring your people get paid properly and on time.

Top payroll software features to look out for

When looking to bring in some payroll software, there are a few key features that you should be on your wish list.

It’s worth noting that a cloud-based option will give you much more flexibility and will be able to scale as your business (and the number of people you need to pay) grows.

If an efficient payroll process is your aim, then look out for:

• Simple pay run: Solutions that can process payments in only a handful of clicks or less will save your payroll team a lot of time.
• Built-in compliance: HMRC-compatible solutions may also have built-in compliance that ensures you’re making deductions and reporting payments properly, even as regulations evolve.
• Fast pension filing: Choose a solution that allows you to easily assess and enrol your people on to your pension scheme and ensure this is reflected in the pay run.
• Create payslips: Being able to create and send payslips in just a few clicks will ensure your people know what and when they’re getting paid. Some solutions also offer a portal that allows them to log in and view current and past payslips electronically.
• Integration with accounting software: If you’re using accounting software, look for a payroll solution that can fully integrate with it. Capabilities can include automatic posting of salary journals into your accounts, which removes duplicate effort and reduces the chance of any false entries.

Final thoughts

Making sure your people are paid correctly and on time is a priority for every business.

To get this right and minimize the chance of mistakes, you need to reduce stress for payroll teams by making the process as simple and efficient as possible.

By following the tips in this article, you can build confidence and trust within your business and make payday a yay day.