SMEs are still avoiding payroll solutions  

Breathe, a people management software provider for SMEs, reveals its latest report, Demystifying payroll for SMEs. It found that almost a quarter (22%) of teams are not utilising payroll solutions, instead opting for time-consuming and error-prone manual spreadsheets, a surprising outcome. 

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

The pandemic has changed how and where we work, with recent data from the Office for National Statistics showing a fifth (21%) of working adults said they had worked exclusively from home – an increase from 14%.  

Payroll still a manual, time-intensive task 

Almost a quarter (22%) of those surveyed said they do not use payroll software to handle salary calculations. Worryingly, one in 10 still use spreadsheets to do this, leaving a huge margin for human error to occur. Only 11% rely on manual timesheets to manage and calculate payroll. 

These figures come as no surprise, given that over a third (37%) of respondents said they spend around 12-17 hours a week managing payroll, which is a huge number of hours in a work week. The average time spent on payroll is 14 hours per week – the equivalent to 87 working days a year. 

Over half (51%) claimed they do not use cloud-based software for people management due to security concerns. Budget constraints (28%) and lack of training (19%) are also listed as reasons. 

Confidence is high, not all understand the function 

The vast majority (82%) of respondents are confident in handling the payroll function, with 68% saying they feel supported by HMRC, demonstrating strong support systems in place –  

Just 12% do not feel supported by HMRC on payroll matters. 

A large majority (82%) believe organisations think the function is well understood by the whole company, which is positive. However, nearly 8% think that payroll as a concept isn’t well grasped by the wider business. 

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% (just under half) of respondents said bookkeeping (-10% YoY comparison) 

• 51% (over half) of respondents said accounting (-3% YoY comparison) 
• 33% (a third) of respondents said office management (no change) 
• 33% (a third) of respondents said HR admin (+5% YoY comparison) 

Jonathan Richards, CEO, Breathe, said: “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.