Can you afford to skimp on your payroll?

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1 THE AUSTRALIAN Can you afford to skimp on your payroll? It would be fair to say that payroll is one part of running a business that managers don t often think about. That is, until something goes wrong. A poorly managed payroll opens the possibility for numerous unfortunate outcomes. One example is fraudulent activity, such when a senior member of the finance team at the electronics retailer Clive Peeters stole nearly $20 million in Perhaps it s not surprising then that many organisations have chosen to outsource their payroll functions third party providers some of whom offer the service for free in exchange for the data their clients payrolls contain. But the recent alleged $165 million tax fraud involving Plutus Payroll has shone a new light on the dangers of outsourcing payroll, with employers now seeking to reassure themselves their payroll is being well managed and remains compliant with government requirements and is not being ripped off. Adam Cranston leaves Sydney Police Centre in Surry Hills after being released on bail related to an investigation into tax fraud at Plutus Payroll. Pic: Dylan Robinson

2 Inevitably this examination is leading some to shift their payroll functions back in house, or to more established providers. And while this might be regarded as trading risk for cost, it is also possible that by investing in a more robust payroll solution employers will find themselves gaining access to additional benefits that help offset those increased costs. Expert Analysis by Alex Haloulos, People and Payroll Sales Director, Sage Software Australia There s more to payroll than just ensuring you re paying staff correctly and staying compliant with government regulations. And with startup companies increasingly offering payroll services and solutions many of which vary in quality it s important to carefully select which payroll company you partner with. Read more... Many of these new capabilities stem directly from changes in business technology. According to author and CEO of Australian Payroll Association, Tracy Angwin, payroll technology has developed significantly in the past two years, with a greater pace of change than in the previous 15. This change is allowing payroll professionals to automate, simplify, or eliminate low value tasks and focus on payroll advisory and strategy, says Angwin. Payroll officers are fast becoming payroll analysts. As a result, she says smart organisations have realised their payroll data are one of their most underrated assets. This can be used to form strategy Tracy Angwin around succession planning, talent management, expansion or restructure, Angwin says. It can also be used to understand key employer demography and trends, especially around leave and workforce planning.

3 It used to take a day to process payroll at Speech and Language Development Australia. That is now down two two hours. For Speech and Language Development Australia (SALDA), the decision to implement payroll software has increased the efficiency of its payroll processing while providing a rich source of information back to the business. The not for profit organisation operates Australia s only school dedicated to students with language disorders, as well as providing support to students in schools across Queensland. SALDA s chief financial officer Colin Aynsley says under its old system processing a payroll took an entire day. We can [now] run a pay within about two hours, so it is a fairly substantial saving to us, Aynsley says. Being a not for profit, it is really important that we have systems that are really efficient and very effective, because we are very limited in administration. And the less we spend on administration means there is more we can spend on helping children. Furthermore, Aynsley says the new system has delivered certainty that payroll is being managed effectively for staff, and has eased the administration burden of responding to queries. What it means is being able to communicate to people all their entitlements and making sure they are properly paid, Aynsley says. We want people focused on helping others. What we don t want people focusing on whether their pay is right or they are unsure of what entitlements they have owing to them. The new system also gives SALDA better access to information regarding its staff, including their education levels and backgrounds. If you were trying to keep all of that manually it would be very difficult to do, Aynsley says. So you can appreciate it is a big benefit to us, because anyone wanting to send their child here can find all that information.

4 The ATO under Tax Commissioner Chris Jordan is introducing a Single Touch Payroll initiative which will require a payment summary to be transmitted to the ATO every pay period. Pic: Kym Smith While modern payroll systems can deliver significant benefits today, another consideration for any organisation employing more than 20 people is the Australian Taxation Office s Single Touch Payroll (STP) reporting initiative, which will require a payment summary to be transmitted to the ATO every pay period. STP will become compulsory on July 1, It is intended to make it easier for the ATO to see when employers are not compliant with their obligations, such as superannuation guarantee payments and Fair Work record keeping. To be ready, both the quality of payroll data needs to be verified, and processes reviewed to ensure employers can deliver the necessary information in the correct format, Angwin says. Angwin says these failures can attract financially crippling penalties or worse. For high profile employers these mistakes, whether deliberate or not, can end up on the front page of newspapers, she says. This content was produced in association with Sage. Read our policy on commercial content here. Expert Analysis by Alex Haloulos, People and Payroll Sales Director, Sage Software Australia

5 There s more to payroll than just ensuring you re paying staff correctly and staying compliant with government regulations. And with startup companies increasingly offering payroll services and solutions many of which vary in quality it s important to carefully select which payroll company you partner with. Poor payroll services can have numerous consequences for your business. For example, information generated within payroll is often shared across multiple business systems. However many low cost systems don t allow you to easily leverage that data and move it freely and securely across multiple business systems. One of the benefits of having access to business wide payroll data is that it allows you to understand the true cost of employment across your business. Many businesses don t have a real time understanding of how labour costs influence profitability, but having that data means you can start planning your business activity and growth, with labour costs as a key ingredient. Alex Haloulos One industry that provides a good example of using data for growth is retail. Armed with data about the costs of running an already profitable store, a retailer can forecast the costs of opening a new store in a similar location. Without this critical data, many retail businesses open new stores and wonder why the store fails. Having a real time and genuine understanding of your labour costs can help that store become profitable. For instance, it allows the retailer to minimise staffing costs, helping them prevent overstaffing and ensure they are rostering staff at the right times of day. Professional services firms can also benefit from data about their labour costs. It can help them analyse and forecast the payroll costs of a future project, which they can then use to quote for tender or when pricing new projects. This is similarly true for construction businesses, who can use data about labour costs incurred in past projects to identify where they may be overspending on a current project and more effectively quote for tender. Visibility of your critical payroll and HR date can also help you understand your staff better. It can help you understand their interests, motivations, and what you need to do to nurture and retain key personnel. Armed with this data, you can stimulate social interaction and build a sense of community within your organisation. At Sage, we provide a range of payroll services and HR solutions to over 5000 mid sized businesses across Australia. Our services range from onpremise and cloud based payroll solutions through to full payroll

6 At Sage, we provide a range of payroll services and HR solutions to over 5000 mid sized businesses across Australia. Our services range from onpremise and cloud based payroll solutions through to full payroll outsourcing. Our experienced team regularly spends significant time onsite with our customers, guiding them on how to best apply payroll practices. Payroll is highly technical and often time consuming. Our aim is to take the complexity out of payroll to help our customers remain compliant, so they can focus on growing their businesses.