With little automaton and integration, calculating payroll and settling payments is a complicated end-to-end process.
The complexity of traditional payment flows makes reconciliation difficult and this is further compounded by an outdated banking infrastructure, with its reliance on manual process and file uploads.
And, as complexity increases, so too does cost. In the current economic climate, there may be a clear temptation to delay the technological upgrades required to streamline this process. But, as recent research has shown, by not shedding legacy technology and shoring up operational efficiency, companies are adopting an increasingly risky strategy – especially when it comes to the payment processes that sit at the heart of a business – payroll.
Payment processes incur both hard and hidden inefficiencies
What’s clear from the research is that payment processes incur both hard and hidden inefficiencies. The biggest hard cost, as reported by 39% of businesses surveyed, is the hours spent on manual processes.
The current payroll process is error-prone and time-consuming – a fragmented process relying on manual entry:
- manual entry of payee details, tax codes and reference numbers
- time taken to check, and often double check the figures, to fix the file errors and incorrect value inputs, to deal with payment rejections and to action the emergency pay procedures, should deadlines be missed or payments be redirected.
- The Bacs system has a 3-day cycle to payment completion so even once files are uploaded and payments are processed, there’s still a wait for those payments to clear.
The hidden costs pack a bigger punch
But, it’s the hidden costs that can take a bigger punch. Take for example, the manual process of payroll – the hard cost is the salary paid against the quantifiable hours spent on the process, while the hidden cost is where those hours could have been better spent and the impact they could have had on customer experience and satisfaction, competitor differentiation, brand reputation, business agility and team morale.
Delay, and there’ll be a price to pay
Small businesses and accountants are often tempted to put off the technological upgrades required to streamline what is traditionally a complicated, error-prone and time-consuming payroll process should take heed – but delay and there’s a high price to pay. And not just in terms of the hard cost of the process itself, but also the hidden costs which are now shown to be more far-reaching.
But there are alternatives. Digital technologies are revolutionising many of the traditional ways of doing things, including payroll, resulting in better end-to-end journeys. Automation and systems integration are the key to realising digital transformation ambitions, while reducing costs, both hard and hidden. And by harnessing Modulr technology, small businesses and their accountants can now do both.
