[UK] Despite security concerns a quarter of SMEs still avoid payroll s

10 Feb 2022

Recent research by people management software provider Breathe has revealed that 1 in 10 payroll and HR professionals continue to use spreadsheets for payroll calculations, prompting human error concerns for a vital function, Information Security Buzz reports.

According to the latest report from Breathe, Demystifying payroll for SMEs, a further 11 per cent are relying on manual timesheets to manage and calculate payroll, suggesting high levels of inefficiency.

While 51 per cent lack understanding around cloud-based solutions, citing security as a top concern.

Surprisingly Breathe found that almost a quarter (22 per cent) of teams are not utilising payroll solutions, instead opting for time-consuming and error-prone manual spreadsheets.

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

The COVID-19 pandemic changed how and where we work. Recent data from the Office for National Statistics showed that a fifth (21 per cent) of working adults said they had worked exclusively from home, increased from 14 per cent.

At a time when so many people are working flexibly between home and the office and must access systems from wherever they are based, it is a concern to note that only just over half (54 per cent) are using cloud-based people management software.

Key findings include:

Payroll remains a manual, time-intensive task. Almost a quarter (22 per cent) of those surveyed said they do not use payroll software to handle salary calculations. Worryingly, 1 in 10 still use spreadsheets to do this, leaving a huge margin for human error to occur. 11 per cent also rely on manual timesheets to manage and calculate payroll

These figures are unsurprising considering that over a third (37 per cent) of respondents said they spend around 12-17 hours a week managing payroll. A significant number of hours in a workweek.

The average time spent on payroll is 14 hours per week; the equivalent to 87 working days a year
Over half (51 per cent) claimed they do not use cloud-based software for people management due to security concerns
Budget constraints (28 per cent) and lack of training (19 per cent) also listed as reasons

Confidence is high, not all understand the function:

A vast majority (82 per cent) of respondents are confident in handling the payroll function
A small margin is ambivalent (12 per cent)
Only a small percentage are unconfident (5 per cent)
68 per cent say they feel supported by HMRC, demonstrating strong support systems in place
12 per cent do not feel supported by HMRC on payroll matters
82 per cent believe the organisation think the function is well understood by the whole company, a positive result
However, nearly 1 in 10 (8 per cent) think that payroll as a concept isn’t well grasped by the wider business

The 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:

46 per cent (just under half) of respondents said bookkeeping (-10 per cent YoY comparison)
51 per cent (over half) of respondents said accounting (-3 per cent YoY comparison)
33 per cent (a third) of respondents said office management (no change)
33 per cent (a third) of respondents said HR admin (+5 per cent YoY comparison)

1 in 5 (14 per cent) 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 said, “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.

Source: Information Security Buzz

(Links and quotes via original reporting)