Whether you are employed full-time, a temporary worker or contractor, at the end of every week or month, you’ve come to expect a nice surprise in your bank account – and if your salary is not there, then all hell breaks loose.
However, few of us are probably aware of the work that goes on behind the scenes to ensure the correct salaries are paid on time to the right people.
In the digital age, making a salary payment should be as easy as clicking a button and, hey presto, the payment is in your account.
But if you are a company, payroll bureau or umbrella company handling hundreds, if not thousands of salary payments on a daily, fortnightly or weekly basis, payroll often entails a host of manual file upload and download processes, which adds complexity, cost and the risk of errors. When you take these factors into consideration, it’s a miracle that we get paid at all.
The 4 May is International Payroll Day, so we’ve put together a list of things that you may be surprised to discover about the world of payroll. Spare a thought next time when your wages are paid for the payroll managers working tirelessly behind the scenes to make it all happen.
- In 2017, there were 364 million payroll payments made to UK employees using Bacs, a more than 50-year-old electronic payment system.
- There is a three-day processing delay with salary payments made using Bacs, and the process for submitting payments can be time consuming and potentially error prone.
- In 2008, the first new payment system in the UK for more than 20 years, Faster Payments, was established. Payments sent via Faster Payments are transmitted in minutes, rather than days, but access is tightly controlled by the banks.
- Payments made using Bacs typically cost less than 40p per transaction, but for Faster Payments can range from 30p – £5 per transaction.
- 40% of payroll managers in the corporate sector still use Excel spreadsheets instead of automated software to manage payroll processes, which adds administrative overhead and increases the risk of errors.
- Manual checks of bank accounts are still performed to see if funds have been deposited in time before salary payments can be made.
- Many payroll companies do not have visibility of failed payments.
- Payroll is typically a low margin business, so companies that handle payroll, for example accountants and payroll bureaus, must upsell other services.
- It takes longer to run payroll than it ever did before because of compliance checking and regulation (complex tax calculations for part-time/ temporary workers/ contractors, auto pensions enrolment).
- There is a new way of making salary payments using Application Programming Interfaces or APIs, which can be easily integrated with payroll software applications to fully automate payments and provide 24x7 access to Faster Payments at competitive rates.
To find out how Modulr can help your business, get in contact with us.