Integrated payroll and HR software: what’s the best option for you?

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One of the most crucial challenges organisations face is paying employees accurately, and on time.

While that may sound straightforward, there are lots of complications that can occur along the way. In this comprehensive guide, we explore how to finding the right expert provider to address these challenges effectively, and create a payroll solution that works for you. We’ll provide actionable insights and steps to help you navigate the complexities of integrated HR and payroll software, ensuring your organisation’s success in this vital area.

Eight challenges UK organisations face with payroll and HR software operations

1. Errors

One of the most critical concerns is the potential for errors in payroll calculations, because these can have a direct, instantaneous impact on employees. Mistakes like incorrect tax calculations or missed bonuses can not only lead to financial hardships for employees but also erode their trust in the organisation.

2. Time-intensive tasks

Manual data entry, calculations, and record-keeping can be not only time-consuming but are also prone to errors. This can detract from the efficiency of HR and payroll teams, reducing their capacity for strategic HR activities.

3. Expertise levels

Maintaining the necessary expertise to handle payroll in-house is another hurdle. Staying up-to-date with constantly changing tax laws and payroll regulations requires specialised knowledge. Smaller organisations, in particular, may struggle to maintain a dedicated, knowledgeable payroll team, which can lead to compliance risks.

4. Software efficiency

The efficiency of existing payroll software is also a concern. Outdated or inefficient systems can result in recurring errors and processing delays. Legacy systems may lack the features needed for modern payroll services, hindering overall effectiveness.

5. Maintenance costs

The cost of maintaining in-house payroll and HR can be substantial. Scaling and adapting such systems – especially payroll software – to accommodate growth and regulatory changes often entail significant financial investments, including software updates, training, and compliance adjustments.

6. Answering employees’ queries

Responding to pay or employment queries and requests is another time-consuming aspect of payroll operations. HR and payroll teams may spend significant time addressing employee inquiries related to payslips, deductions, and benefits, reducing their overall efficiency and potentially causing delays in resolving other HR issues.

7. Data security

Data security considerations, especially when emailing out payslips, cannot be overlooked vital. Handling sensitive employee data requires robust security measures to protect against data breaches. Additionally, organisations must ensure compliance with data protection laws, such as the GDPR, when sharing payroll information.

8. Employee trust

Lastly, building and maintaining trust with employees is essential. Payroll inaccuracies can erode this trust, impacting job satisfaction and retention. Employees should have confidence that they will be paid accurately and on time each month.

How to find the right payroll and HR software provider

Selecting the right payroll software and provider is a significant decision for your organisation. To make an informed choice, follow these steps:

First, ensure that the provider you’re considering can meet your specific compliance requirements. Check their track record in handling issues like UK tax and labour laws. And look into their security credentials and certifications; do they hold the ISO 27001 certification for information security management systems, for example? It’s also a good idea to find out if their staff members hold CIPP certifications, which demonstrate a high level of payroll expertise

Next, think about flexibility. Can the provider and their services adapt to your unique needs? Consider whether the software and service can accommodate changes in your payroll process, whether due to growth or shifts in regulations

When assessing costs, don’t just look at the upfront fees. Understand the total cost of ownership (TCO), including ongoing maintenance and support costs, and any hidden expenses. This comprehensive view will help you make a financially sound decision, especially when comparing outsourcing to in-house systems

Scalability is another critical factor. Ensure the provider can grow with your organisation. This is vital for accommodating future growth or dealing with fluctuations in employee numbers. Look for evidence that the provider has successfully handled payroll for organisations of your size or larger

Integration capabilities are essential, too. Check whether the payroll software seamlessly integrates with other systems you use, especially your online HR system. Integration ensures data consistency, reduces manual entry, and minimises the risk of errors

Don’t forget about communication processes and customer support. Examine the provider’s communication procedures, especially during onboarding and ongoing support. Assess their customer support package, including response times and overall effectiveness. It’s a good idea to request references or read reviews from other clients to gauge satisfaction levels.

Related reading: How to make your next HRIS payroll software implementation the best yet

How to understand a payroll provider’s different services

When it comes to managing your payroll, you’ll typically encounter three primary solutions: in-house, outsourced (managed), and bureau. Your choice depends on several factors, including your team’s expertise and your payroll’s intricacies. So, the first question to ask yourself is: should you should assemble your own team of payroll experts, or entrust your payroll to an external provider who specialises in the field? Here’s a breakdown of these options:

In-house payroll

If you opt for an in-house payroll department, your employees’ salaries are processed through the very mechanism they oversee, which means they have a vested interest in ensuring accuracy. Their responsibilities encompass tasks like preparing and meticulously verifying payroll data, calculating the pay run, handling returns to external entities, and disbursing pay advances. Running your payroll in house gives you total control and flexibility over how you pay your staff.

Outsourced (managed) payroll

On the other hand, with outsourced payroll, your organisation partners with an outsourcing company to handle the entire payroll function. This service level is often customisable, but the provider will typically liaise with HMRC on your behalf, ensure compliance with payroll legislation, and provide a comprehensive payroll service that covers pay and pensions. A top-notch outsourced payroll service can make you feel as if the outsourcing entity is an extension of your own payroll team while simultaneously trimming your costs and time expenditure.

 

Related reading: Five reasons business leaders in the UK outsourced payroll - and why you should, too

 

Payroll bureau services

A payroll bureau is a specialised service provider that offers comprehensive payroll management solutions. These services encompass a wide range of payroll-related functions such as handling Pay As You Earn (PAYE) matters, Bacs payment processing, secure data transfer, validation reports, online payment approval, and real-time information (RTI) reporting. These services are designed to streamline payroll processes, ensure compliance with tax and employment regulations, and reduce the administrative burden on businesses.

Ultimately, the decision between these payroll solutions hinges on your specific needs, resources, and the level of control you desire. Whether you choose in-house or outsourced payroll, the key is to select an option that aligns seamlessly with your organisation’s payroll intricacies and objectives.

Ciphr Payroll and Paylink

Ciphr has developed its own tool – which we call the Ciphr Paylink – to enable payroll-related data in your Ciphr HR software to be shared with other systems in your HR tech stack, such as your payroll system. It means we can integrate your Ciphr HR system with your chosen payroll software, whether that’s Ciphr’s own solution or an alternative from another vendor. The integration aids data accuracy, enables information to be securely transmitted from one system to another, and means we can make documents such as online payslips and P60s available in your Ciphr HR employee self-service portal.

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Before committing to a payroll and HR software provider, it’s essential to pinpoint the specific areas within your business that require improvement. Seek out a vendor that offers a range of technology solutions, boasts the necessary expertise, holds relevant accreditations, and prioritises robust security measures. Additionally, carefully consider whether an integrated system encompassing both payroll and HR software aligns with your organisation’s needs. Evaluate and make a well-informed choice regarding whether you prefer to manage payroll in-house, opt for outsourcing, or utilise a payroll bureau. Furthermore, actively explore opportunities for streamlining operations and minimising manual processes to enhance overall efficiency.

Selecting the right HRIS and payroll software – and the provider – is a significant decision for your organisation. To explore this further, we invite you to download our payroll services guide or book a demo to delve deeper into the intricacies of payroll management and make the best choice for your business.

 

Additional reading: Roundup of payroll changes 2024/25: everything you need to know