Payroll is an important function for any business. Whether it’s handled internally or outsourced, here are the top 5 challenges payroll specialists solve for businesses every day, writes Jennie Kingma.
As a bookkeeper who has offered payroll services to businesses for nearly 20 years’, I’ve handled a huge variety of knotty issues or complex payroll challenges my clients can serve up.
From sorting out payroll technology to keeping you compliant, here are the main problems I and other payroll specialists like myself fix each and every day across New Zealand. So, whether you need to hire a payroll officer, or you’re a bookkeeper thinking of offering payroll services, you’ll want to read on.
Payroll has really started to advance in the last three or four years. Legislation has been the big driver in prompting businesses to outsource their payroll needs. Changes to annual leave and sick pay are a big part of this and, contrary to what some business owners may believe, you can’t simply write off these entitlements at the end of the year, you have to accrue it and roll it over into the new year.
For many owners and managers, this new payroll environment requires too much insight to deal with on a day to day basis. Over the years it’s become more and more complicated and people need to know they’re doing it right.
If you don’t understand the legislation and how to interpret it (which is why some of the bookkeepers I know won’t have a bar of payroll), then it’s best to call in an expert. Anyone you choose to go to for expert payroll advice should be making a conscious effort to stay up-to-date and attend specialist training to ensure they’re across the ever-changing legislation and how to interpret it.
Another key thing a good payroll expert can do is to make sure you’re set up on the right software systems to make this function of your business as automated and streamlined as possible.
I’ve done a payroll conversion recently for someone who’s converted from MYOB Payroll to Essentials Payroll and needed some training.
We ran the first monthly pay run. Her response? “Is that it? Is it done?” and “Oh my God, that’s just so much easier!”
MYOB did the conversion for her, which brought across all the existing employees with their history. We needed to do some checks, showed her through and created a new employee that had just started. I had her do that and then we had the monthly salaries to process, so we had to run the monthly pay run. She’ll ring us again for help in a month’s time, but immediately she could see the benefit of having our experience and advice throughout the setup process.
I’ve now got a couple of payroll clients that have over 100 staff. One example started with us when they had just two branches and now they have 19 – with all the additional staff that go with it.
The problem with growing a business is that it often requires significant changes to be made to both systems and processes in order to keep up with the payroll load. And for this example I’ve mentioned, it’s a clear case of ‘you don’t know what you don’t know’.
For example, their in-house accountant didn’t know you could create bank files, nor did they realise you could send pay slips via email. This isn’t a cardinal sin, but it does show how easy it is for processes to fall behind as technology evolves.
Showing the team how they can claw back hours upon hours of inefficiencies gives me a real buzz and it helps our clients realise a lot of value from their relationship with us. Especially when you go from a state of manually sending pay and pay slips to over 100 employees individually to getting them all done at once within a fraction of the time.
We’ve got one payroll client that came to us in the middle of a marriage breakup. Let’s just say it got pretty nasty for a while there.
The husband called us having never dealt with us before – previously it was always the wife calling in.
The client wasn’t aware of how to process his payroll without his wife (now ex-wife). She’d been processing pay runs herself, but he didn’t have the time to learn it all in time.
Our response? Let us handle it for you. We had advised on their payroll system and were familiar with the business, so it was very little effort to jump in at the last minute and process that pay run for him.
Can payroll officers save your marriage? That’s not our job. But at least I’m confident in saying we can help keep your business compliant and payroll ticking over, leaving clients more time and less anxiety when dealing with their personal affairs.
Where we do see things being done incorrectly, payroll officers advise clients of the correct process.
A number of our clients have had real trouble calculating annual leave entitlements with termination pays, addons and stuff like that. Thankfully they’ve reached out to us for our knowledge and experience and we’ve been able to help get things sorted in each case. We’re currently working through a process of sharing the relevant information and making certain none of our clients are caught out.
In this sense, payroll specialists are taking on an advisory role. We troubleshoot more regarding misinterpretations and lack of knowledge of the legislation more than how our clients actually process their payroll.
Some examples of common queries include things like ‘How do I do a final pay?’, ‘How do I pay out annual leave’ and ‘someone’s gone off ACC, how do you do that?’
In each of these cases, we’re already ready with one of two responses: ‘Let me show you how that’s done’ or if that’s going to present its own problems, ‘Let’s handle that for you’.
And that just about covers it.
Of course, summarising the role of a payroll specialist or outsourced payroll services like ours fails to capture the sheer weight of information we need to stay on top of, but at least it should give you an inkling as to why payroll and the growth of payroll outsourcing to specialists has become so incredibly important to today’s business environment. Remember: the IR says ignorance is not an excuse and will not hesitate to fine businesses getting it wrong.