Firmin Zocchetto, CEO and Co-Founder of PayFit, explores the root causes and solutions for small businesses.

A day in the life of a startup leader sure can be hectic. With only a small number of people at your disposal to help run and grow the business, it’s likely that they (and you) are frequently getting stuck in doing certain tasks that lie outside of traditional remits. Such a busy, often unpredictable, schedule can be stress-inducing for leaders and employees. And that’s before we’ve considered the high-pressure task of paying your people correctly, on time, every time.

It’s official – manual payroll processes are adding to the stresses of those tasked with overseeing this essential business function. According to recent research, which took the payroll pulse of more than 500 HR and Finance professionals, 37% say that the time spent on manual payroll tasks is causing stress for them and their teams.

But what’s causing this stress, and what can be done about it?

Fiddly manual tasks

The same survey found that almost a quarter (24%) are still managing payroll manually, with around the same number saying that they are unaware of some of the benefits that payroll automation can provide. A little concerning is the fact that 32% of small companies want no automation of common payroll tasks at all, which could further compound the feelings of stress.

Elements of payroll automation that the majority of small UK businesses would most like to automate include submitting payments and information to HMRC (15%), calculating statutory deductions (13%) and handling payroll errors & corrections (11%).

Having to manually complete these tasks accurately – in order to avoid making a mistake that might incur the wrath of HMRC, or mean employees are paid incorrectly – is clearly presenting frustrations for those running payroll, and taking their time away from other more impactful work.

One solution to help startups and small businesses alleviate some of these payroll stressors is to look at ways of standardising, streamlining or automating these elements. This includes reviewing processes to see where payroll errors are occurring, for example with changes to monthly salaries, or updates to payroll legislation and rates that may have been missed. It might also include looking at ways to integrate regular submissions and payments to HMRC with the monthly payroll. All of this can be taken care of with a good quality, HMRC-recognised payroll software.

Diverse working behaviours

Non-uniform ways of working present a payroll challenge for UK small businesses. In the survey, they identify a number of elements they feel are making – or will make – managing payroll more complex. These include flexible hours (61%), working from abroad (45%), and fixed or short term contracts (42%).

Flexible schedules and contracts are seemingly creating inconsistencies in the way that payroll is overseen, for example in the case of accurate overtime payments for those on an hourly rate, freelancers or contractors.

Working location now also impacts payroll, with ‘working from abroad’ arrangements having the potential to complicate things for UK businesses. This could be true where currency exchange rates need to be considered, as well as days spent working in and out of a location and the associated tax implications.

Creating payroll policies and processes that are consistent across diverse working behaviours and locations will be key here. The same goes for looking at tech that provides some simple People management capabilities alongside payroll, such as shared calendars (to keep abreast of working locations), and perhaps a tool to calculate overtime payments automatically, as well as hourly, weekly and monthly rates of pay.

Regulatory compliance

The ever-evolving regulatory landscape has been getting a little more … ever-evolving lately! The new Labour government is implementing a swathe of changes to workers’ rights in the UK, covering areas such as flexible contracts, parental leave, pay gap reporting and sick pay.

What this means is that changes are afoot in terms of how HMRC and your employees will need to be paid, making the case for automation an even stronger one.

Rather than risk fines or penalties, or employees not being paid correctly and the impact this could have on morale and retention, now is the time to look at tech that can take these stressors off teams’ hands, ensure everything is calculated correctly and payments are made when they need to be.