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paying client's payrun

engagement terms?

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A couple of clients have spoken to me re making payment to their employees. They'd transfer the gross cost to my client account, I'd make the net & HMRC payments from there. i'll be getting them to sign-off on the payments & bank details and am happy with everything that's being agreed.

I'm trying to work out what to put in the T&Cs of my LoE ... anychance anyone who does this can copy & paste or DM me a link / LoE?

It's very much appreciated :)

Thanks

Replies (16)

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By Paul Crowley
22nd Nov 2021 15:51

You are bolder then me
Really prefer not to

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Replying to Paul Crowley:
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By wilcoskip
22nd Nov 2021 16:34

I agree. Just had a client ask me if we do this. They're sane and reasonable as far as clients go, but I can only see a world of pain and wasted time if the slightest thing goes wrong. Just not worth it.

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Stepurhan
By stepurhan
22nd Nov 2021 16:52

If they are able to set up a transfer to you, is it really much harder to set up transfers to their employees? This does not sound like a good idea.

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By David Ex
22nd Nov 2021 17:27

Who pays the client’s suppliers, etc.?

Surely this is a purely operational matter outside the remit of accounting services?

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By paul.benny
22nd Nov 2021 17:20

This introduces another failure point into payroll.

If client fails to put you in funds in a timely manner and/or fails to approve payments employees don't get paid.

If, for any reason, client countermands their transfer, you're potentially out of pocket.

Don't do it.

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ALISK
By atleastisoundknowledgable...
22nd Nov 2021 17:26

both clients are service companies, they have about 5 suppliers the director pays bacs but 30-50 staff that they don't want to manually pay. They bank with the new banks so can't use an upload.

They've used firms before that did the payroll & payments (1 used their accountants, the other used a payroll bureau) and have both said that they'd move the payroll to someone who could (not in a threatening manner, just factually).

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Replying to atleastisoundknowledgable...:
By ireallyshouldknowthisbut
22nd Nov 2021 17:32

For that scenario, why doesn't the company open a "proper" business account just for PAYE, pay the sum into that and get one of the 50 staff to do the uploaded pay run if the director does not want to get involved?

Takes all the risk out of your hands.

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By ireallyshouldknowthisbut
22nd Nov 2021 17:28

I don't ever touch client monies. I don't see the point of all the risk, hassle and paperwork.

Some old fashioned firm round my way I get clients from now and again has everyone write a cheque to their client account which they then pay to HMRC. Utter madness. Indeed for several clients they didn't pay on time..... No idea what planet they are on.

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By I'msorryIhaven'taclue
22nd Nov 2021 19:08

When I did this for clients many moons ago I had access to clients' business bank accounts and was able to dish out cheques (always signed by the client) and/or make online payments.

Nowadays I wouldn't want access to a client's main bank account - the world's changed far too much for that - but I wonder whether your plan might work more smoothly if your client(s) set up a separate wages bank account (30 to 50 employees is no mean sum of cash, so their bank(s) should play ball) for you to administer.

The problem with the moneys falling directly into your hands - and thereby under your direct control - would be that all the disclaimer T&Cs in the world aren't going to absolve you when payments are late / wrong / penalised. You'd end up carrying the can, not to mention have to field umpteen calls from disgruntled employees blaming you because their mortgage repayment bounced or their tax code isn't quite to their liking.

IMHO there's a subtle change if you take on the role of a payroll clerk / bookkeeper (albeit a hired-in version, rather than an employed model). Keeps the liability with the employer rather than shifting it to you.

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By Hugo Fair
22nd Nov 2021 19:15

There are already sensible people telling you that it's a bad idea (with some examples of why), so I'll restrict myself to pointing out an alternative (which may be what clients' previous suppliers were doing) ... become registered for BABS (BACS Approved Bureau Scheme) and then offer your clients that service.
https://www.bacs.co.uk/Access/BacsApprovedServices/BacsApprovedBureaux/P...

The registration process is neither simple nor inexpensive (so really only makes sense if it's going to be part of your offering to a reasonable volume of clients) - but it inverts the risk balance, whilst providing the (lazy) client with what they requested.

In essence you (the 3rd-party service provider) become authorised to make payments (subject to certain controls) direct from the client's account - so, in the case of PAYE, can deliver the 'full package' without the client lifting a finger and without risk to your financials.

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By tltodman
23rd Nov 2021 10:07

Depends on who they bank with but they could set you up as user on their own bank account but with no rights other than to view statements and set up payments. They then have to go in to authorise the payments before any money leaves the account.

Lloyds have a "dual control" payments option (for clients who liked to have 2 people signing cheques in the old days) and can set up users with no control (ie you). So you access the account with your own login to set up the staff and PAYE payments but they have to actually approve it (or two people do if it's dual control) before any money leaves their account.

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Replying to tltodman:
ALISK
By atleastisoundknowledgable...
23rd Nov 2021 10:13

They use the new challenger banks which don't have such features (I believe that they are just prepaid Mastercard accounts)

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By jwgrogan
23rd Nov 2021 12:29

You might also want to check whether it would require a change in MLR registration as a 'money service business' or any other regulation that might be relevant when potentially providing a banking service for the client.

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By paulwakefield1
23rd Nov 2021 13:26

When I see the grief that one of my clients is giving their payroll provider with, in my view, every justification re payments made/not made, I would stay well clear. But, if you do go ahead, make sure your processes are bomb proof.

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By SteveHa
23rd Nov 2021 13:27

During my Baker Tilly days we used to do this for a few clients, either by direct login and arrange BACS, or faxing BACS sheets direct to the banks. However, there were multiple checks to ensure that nothing went wrong.

After I moved on, I refused point blank to get involved with arranging payments for clients.

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By johnt27
23rd Nov 2021 16:44

I wouldn't do this through your client account or waste time with BACS application - just use one of the many payment applications that have cropped up over the years to do this. Many will integrate with modern payroll systems and even better the newer ones use open banking payment systems which make the whole process even more seamless, avoid the need to transfer funds to an intermediate account, making it lower risk for all involved.

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