Dec 2019

The evolution of the payroll bureau

If you are an accountant working in practice, you may know that I was once one of you, before I escaped to the leafy suburbs of IT.

While in practice, part of my income came from providing a payroll bureau service.

This came with its challenges as I was tied to it, it wasn't very profitable and not all of my payroll clients understood that I actually needed to have the employees' hours before I could do the payroll.

I would send them their payslips with a summary report, reminded them when to pay Revenue and, in return, they would grudgingly pay my fees.

That was twenty years ago. A lot has happened since then, the two main things being technology and PAYE Modernisation.

I wish that PAYE Modernisation had been around in my time. I could really have used it to convince some of my less conscientious clients to change their ways or else. The "or else" being the big stick of Revenue fines.

Technology has enabled a lot of things. The arrival of the smart phone, cloud services and increased internet speeds have been transformative.

In my practice days, I had one client who considered themselves at the forefront of technology. They would have been blown away seeing the way their employees could now receive their payslips on their smart phone and all the other cool things e.g. holiday requests, a document portal and so on. Mind you, if I was still practising and had that same client, I think that these are things they would expect.

That same client would also expect to be able to log on to their own portal and get whatever payroll information they wanted 24/7.

What we are starting to see now is that this type of client is becoming more of a thing. A large part of the driving force for this is their increasingly youthful workforce. Millennials grow up with a smart phone attached to them and they want as much of their life on it as possible.

Another feature that I wish had been around in my time is getting clients to effectively update their own payroll. What I mean by this is that instead of the various ways they would send the hours (word documents, emails, scraps of paper), they would now log in to their portal, update the hours and these would flow seamlessly in to the payroll. Plus everything would be logged and time stamped, so they couldn't blame me if an employee was overpaid or not paid at all.

All of the above would have certainly transformed my basic payroll service of 20 years ago and forged a client base less likely to defect to some new accountant trending on social media.

The clients would still be getting the same attention as always but the "value added" would be enormous. They get to look much more modern with their employees, which can help with attracting and retaining employees. They also gain access to a HR tool with which they can manage holidays, roll out documents and ensure that employee contact information is always current. The vast majority of small/micro employers have nothing like this.

In the UK, this value added payroll service is more common than it is here and I have asked accountants there what they charge. As you can imagine it varies quite a bit and will depend on the type and size of business, but I have heard rates as high as £10 per payslip for higher net worth clients with the average closer to £5.

This type of pricing would certainly have catapulted my small bureau service in to one of my more profitable activities as the cost of all this technology can be as little as 8c per employee per month.

Paul Byrne fca

The evolution of the payroll bureau

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