Simon Palmer outlines the lessons from Covid-19 and explains how they could shape the payroll industry over the next few years.
In a few short weeks, as with the majority of the UK, all aspects of the payroll industry have been impacted by Covid-19. The industry has had to deal at break-neck speed with the changing requirements of its clients and the implementation of emergency legislation while facing significant internal challenges imposed by lockdown.
As with many other critical sectors it has required flexibility, innovation and the increased use of technology to ensure that services have continued, whether from HMRC, software developers, payroll providers or businesses themselves. So what has happened and how will this shape the future of payroll beyond the pandemic?
As businesses across the UK moved into lockdown, the ability to enable agile working became and continues to be critical. Businesses, payroll bureaux and accountancy firms all had to quickly take action to protect staff while ensuring that they continued to fulfil the requirements of ‘key workers’.
Cloud-based software ensured that everyone could move easily and quickly to operate remotely from multiple locations. However, for those businesses or payroll providers with desktop-based solutions it was a more challenging position, particularly where access to offices wasn’t possible or social distancing measures meant that teams were split across multiple locations.
What is already clear is that the future holds a more agile workforce with many businesses re-evaluating their working practices to allow more flexibility on working practices and questioning the need for large, expensive premises.
With that will come an increased focus on, and investment in, cloud-based systems and technology to enable this transformation to take place. Certainly, the investment Qtac have made over the past few years, not only in our own technology but our cloud-based payroll portal, certainly came to fore when transitioning to lockdown and enabled both our inhouse outsource team and clients to continue to operate. The industry will certainly be focusing on how technology and innovation can continue to develop products and services that meet the needs of businesses, employees and their advisors.
High-speed legislative change
At the start of 2020 the term furlough wasn’t used within the UK generally, let alone by payroll providers. A few weeks on and it’s the hot topic for businesses, their accountants, payroll providers and HMRC.
The Government Job Retention Scheme, changes to Statutory Sick Pay (SSP) and the Self Employed Grant has no doubt significantly helped businesses to deal with the impact of Covid-19. The speed at which these schemes were announced and then implemented by HMRC has meant that the payroll industry has also had to quickly adapt and deliver solutions to their clients within a matter of weeks.
Accountancy firms have found themselves having to support virtually their entire client base at the same time, developers have had to update systems and develop new functionality in a fraction of the usual timeframes and payroll providers have had to communicate and hand-hold clients through the claims process.
If anything, this time has reminded everyone that with the ability to adapt, flex and collaborate, as we’ve experienced as part of our membership of BASDA, who have been working closely with HMRC to provide clarity around development changes, it is possible to move mountains. If this approach continues beyond the current pandemic the future of the industry and how it evolves around the use of technology such as AI could be very exciting.
Renewed focus on outsourcing
The pandemic has shown that every business needs to be able to adapt quickly to change and many traditional ways of doing things are likely to be reviewed over the forthcoming months.
Payroll management is no exception. Whether inhouse software meets the needs of an agile workforce, the support and expertise provided by a provider when it was needed most or the over reliance on one or two key members of staff will all be reviewed.
It’s at that time that the benefits of outsourcing payroll management are likely to come into their own. Outsourcing payroll to their accountancy firm or a payroll bureau solves many of the headaches that businesses have had to face, and at a time when cutting costs will be high on the agenda it offers a cost-effective solution.
Payroll providers themselves therefore need to ensure they too can overcome any remaining challenges that the pandemic has highlighted and invest for the future so that they can meet the needs of clients.
Whatever decisions they make one thing is clear, technology will certainly play its part and the move to fully cloud-based solutions and a greater investment in digital transformation will be key.
• Simon Palmer is Sales Director at Qtac