How many of your payroll clients are either Director only or small salaried payrolls that don’t change month on month?
KeyPay’s recent payroll survey KeyPay UK Payroll Survey revealed that 46% of practices had a long tail of director only and small static salaried payrolls (i.e. over 70% of their total payroll clients).
These payrolls are the bread and butter of the payroll universe. Over 90% of businesses have fewer than 5 employees and over 95% have fewer than 10.
All the excitement happens in the larger payrolls, where zero/contracted hours require timesheets, variable earnings and time and attendance monitoring. The more complex the payroll, the more you can charge and - possibly - the bigger the margins.
But the bread and butter, that’s where most of the action happens.
And how profitable are these payrolls? (spoiler alert - we didn’t ask! But it is worth asking yourself that question and I’d be delighted to hear your comments).
My gut instinct is that for most practices they help revenue tick over, but when you take into account the software costs, the chasing for information (that hasn’t changed), the cost of your payroll staff and the opportunity cost of other clients foregone that they aren’t really a big money spinner.
And yet, they should be………
Small employers still require all of the following:
To be processed compliantly and on time
Automatic enrolment duties - calculations, notifications, data submissions
FPS/EPS submissions
Tax code updates
Student Loan information
Court Orders/AEOs
Payroll journal updates
Statutory payments
Payslips/P60s/P45s and the list goes on.
Director only payrolls are obviously a lot simpler, but even then you can you can spend 5-10 minutes running them once you include all of the additional tasks required to completely finalise the process.
We tested this idea recently at XeroCon and Director only payroll processing was one of the 3 biggest timesavers across all of the visitors to the KeyPay stand.
[Automated Journal posting into Xero and automating every part of the Automatic Enrolment process were the other two].
The other concern that XeroCon visitors mentioned in this regard was the ability to maintain control of the process so that automation was interrupted and they were alerted when something changed. Not a problem for KeyPay users because we have over 25 warnings that you can turn on or off to create your perfect combination of warnings to halt automation if necessary.
So, chances are that automating Director only and small salaried payrolls are something that could make a significant difference to not only the margins available on those clients, but also something that could free up internal resources to enable you to grow the number of your payroll clients.
Payroll profitability for practices is about small efficiency gains in lots of different areas. With 5 months to the tax year end, maybe it’s time to be thinking about your plans for 2020/21?
If you’re interesting in finding out more, please contact me at [email protected] or have a free trial at keypay.co.uk.
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