A Quarter Of SMEs Still Avoiding Payroll Solutions – With Security A Top Cloud Concern

·       Recent research by Breathe finds 1 in 10 payroll and HR professionals are still using spreadsheets for payroll calculations, driving human error concerns for a vital function

·       A further 11% are relying on manual timesheets to manage and calculate payroll, suggesting high levels of inefficiency

·       51% lack understanding around cloud-based solutions, citing security as top concern

Breathe, the people management software provider for SMEs, reveals its latest report, Demystifying payroll for SMEs. It found that almost a quarter (22%) of teams are not utilising payroll solutions, instead opting for time consuming and error-prone manual spreadsheets, a surprising outcome.

The research in conjunction with Censuswide, surveyed 500 respondents who work for companies with 10-250 employees, with payroll management being all or a part of their responsibilities.

The pandemic has changed how and where we work, with recent data from the Office for National Statistics showing a fifth (21%) of working adults said they had worked exclusively from home, an increase from 14%.

At a time when so many people are dividing their working time between home and the office and need to access systems from wherever they happen to be working, concerningly, only just over half (54%) are using cloud-based people management software.

Key findings include:

Payroll still a manual, time-intensive task:

·       Almost a quarter (22%) of those surveyed said they do not use payroll software to handle salary calculations

o   Worryingly, 1 in 10 still use spreadsheets to do this, leaving a huge margin for human error to occur

o   11% also rely on manual timesheets to manage and calculate payroll

·       These figures come as no surprise, given that over a third (37%) of respondents said they spend around 12-17 hours a week managing payroll, which is a huge number of hours in a work week

o   The average time spent on payroll is 14 hours per week – the equivalent to 87 working days a year

·       Over half (51%) claimed they do not use cloud-based software for people management due to security concerns

o   Budget constraints (28%) and lack of training (19%) also listed as reasons

Confidence is high, not all understand the function:

·       Vast majority (82%) of respondents are confident in handling the payroll function

o   A small margin is ambivalent (12%) and then only a small percentage are unconfident (5%)

·       What’s more, 68% say they feel supported by HMRC, demonstrating strong support systems in place

o   12% do not feel support by HMRC on payroll matters

·       82% believe the organisation think the function is well understood by the whole company, which is positive

o   However nearly 1 in 10 (8%) think that payroll as a concept isn’t well grasped by the wider business

Changing role of HR

·       Respondents were asked what areas of administration (on top of their payroll duties) if any, they were responsible for managing each year, and the contrast is clear:

o   46% (just under half) of respondents said bookkeeping (-10% YoY comparison)

o   51% (over half) of respondents said accounting (-3% YoY comparison)

o   33% (a third) of respondents said office management (no change)

o   33% (a third) of respondents said HR admin (+5% YoY comparison)

·       1 in 5 (14%) of those surveyed said they have not received any specific training on payroll, suggesting there are still gaps in knowledge across the board for those tasked with managing the function

Jonathan Richards, CEO at Breathe commented:
“Payroll is possibly one of the most important functions of a business. If you’re not paying your people correctly and on time, then it will be near-on impossible to foster a positive company culture with a team of people who are motivated.

“It is shocking to see how far we still have to go in stopping time consuming spreadsheets for payroll and ensuring SMEs are investing in cloud-based platforms. By taking the burden off payroll and HR teams through using software for tasks such as payroll, they will have more time to spend on what is ultimately the biggest asset to their companies: their people. With accredited and security-complaint solutions on the market, it’s time for SMEs to ditch the spreadsheets and harness the cloud.

He added:

“One of the most significant advantages of cloud-based payroll software systems is that they are hosted in datacentres which are often far more secure than a small business’ own environment. This means employee data is less at risk from cybersecurity issues such as ransomware. But not all clouds are equal. SMEs should opt for software which has received ISO27001 accreditation which is the industry’s benchmark of high security.”

The full payroll report is available here.