FACT: Moving to the cloud will grow your business
Lots of practices have moved to cloud payroll solutions this year and their motivations are diverse.
Unsurprisingly, new practices often choose a cloud solution straight off of the bat, so at KeyPay we see lots of new practices choosing to use us from the outset.
They choose cloud partly because they want the convenience and efficiency, and partly because it makes sense to have a pay as you go model as you build your client base.
If you were starting from scratch with a small client base, why would you want to pay a licence fee that you may not use? Why would you want to pay for IT support and back up servers? Why would you want a desktop software that doesn’t talk to your (inevitably) cloud accounting software?
It’s a genuine, 100% no-brainer.
By setting themselves up with the right technology from the get go, these micro practices grow into something bigger and stronger - often very quickly.
But let’s leave them aside, because although new technology is part of the reason why they grow (inherent competitive advantage), you’d expect them to grow anyway, so it’s not exactly a revelation.
Last month we undertook a high level review to see if we could see any trends in how paid employee numbers had fluctuated through COVID-19.
The numbers were not revelatory - none of the practices using KeyPay had seen the number of employees paid shrink over the COVID window. However, one of the things that stood out was unexpected. Over the period, a sizeable minority of practices had grown their payroll proposition by 10% or more. And a high proportion of that group had grown more than 20%.
Much of that growth was driven by the acquisition of new clients - and often slightly bigger clients than they had taken on previously.
The biggest growers more than doubled their total payroll numbers (only counting those with a minimum of 75 unique employees paid a month at the outset). And a couple of practices even started outsourcing their payroll services to other practices (and their growth was even faster).
What are the factors in that growth?
We approached a handful of our fastest growing partners and these were the things that they had consistently noticed.
From an existing payroll client perspective:
They were spending less time for every single client on payroll administration (including all.some of payroll processing, pensions, client queries, sending reports, payslips, tax reminders etc);
- Automating the submission of payroll journals to Xero saved lots of time;
- They spent less time trying to resolve support queries compared with their previous software (in part because the support team can see their data in a way that can’t happen with desktop software);
- They spent more money on software but more than recouped it in terms of their own time and/or lower staff payroll costs, and
- They could offer more services to their clients.
From a new payroll client perspective:
- They were more competitive locally (i.e. they had a more attractive proposition to new businesses and were more efficient)
- Those who had moved because they wanted to spend less time on payroll and who saw it as a necessary evil, were now actively promoting their payroll solutions, meaning they won more clients for non-payroll services too
- Some had grown through referrals from KeyPay (we don’t have an internal bureau so we pass opportunities to our partners)
- Automated director only payrolls meant that they could take new clients on with effectively no additional administration time
- New clients were demanding employee and employer portals - so more opportunities they could accommodate
- They could now offer integrated timesheet and workforce management solutions to clients - meaning they had a better offering to the retail and leisure sectors and bigger margins/more services when they sold to them.
The businesses that grew the most were generally not those with the cheapest payroll offerings and neither were they the most sales-orientated practices. Each practice had a different blend of reasons for growth,, but all reported more confidence in being able to offer prospective clients something that met their payroll needs and differentiated them from their competitors.
Ultimately, whether your practice is brand new, or whether you’ve been around for decades, technology plays a vital part in business growth. Whether you want to remain stagnant with your existing software, or embrace change and reap the benefits of automation - is up to you.
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