Payroll is an essential operational component of any company or organisation. Getting employees paid on time and correctly is not only a legal obligation but an essential process to motivate and maintain the workforce. But there are other benefits to a successful payroll run. A company will have to comply with multiple regulatory authorities’ ever changing statutory rules, tax requirements, and national insurance contributions. HMRC, Pension Regulator, Health and Safety, Home Office – they all have a say in how an employer processes the payroll.
What is Umbrella Payroll?
Agency contractors obtain their take home pay through Umbrella Payroll companies, it gets much more complex than a standard payroll, for a number of reasons.
- To start with, Umbrella Payroll companies have first to invoice their agency clients every week using the timesheets received as the input. Until this is done and funds received in the bank, Umbrella company wouldn’t even know who and how much to pay. There can be agency contractors on timesheets yet to be on-boarded or paid and there could be data mis-matches. The window period available to get all these sorted is usually less than a day.
- The on-boarding process for new agency contractors poses its own set of challenges starting with the right to work checks, issuing the correct employment contract, setting-up the appropriate rules for margins, holiday pay, payment terms, tax etc. Any errors at this stage can result in wrong wages getting paid, missed or late payments leading to loss of reputation to the Umbrella payroll company.
- The payroll calculations involve complex circular calculations, potential NMW violations, tricky Holiday Pay rules and Auto-enrolment tasks. All these under extremely tight deadlines are prone to human errors at multiple points.
- Unlike a conventional company paying their employees once a week or month, most Umbrella Payroll companies will be required to run payroll and pay agency contractors every day of the week. This means, multiple FPS submissions to HMRC each week and the risk of penalty. Also multiple AE assessments and communication each week.
- Post payment amendment requests and reversal of payroll are not uncommon either. When such exceptions occur, the whole cycle starting from re-invoicing to salary payment will have to be handled correctly with appropriate audit trail.
Why use an Umbrella Payroll Software
While payroll calculations can be done using a combination of spreadsheets, a traditional PAYE payroll software and accounting software, an Umbrella company simply cannot scale up the company without using a purpose built fully automated Umbrella Payroll software platform, for the following reasons.
Speed & Accuracy
Speed and accuracy are critical to the success of an Umbrella Payroll business. Using a spreadsheet formula, it simply takes too much time to key in the data safely and pre-process even 25 timesheets. The results from the spreadsheet calculation will have to be keyed into a PAYE system to produce the final payslip calculations. Invoicing will have to be done using an accounting software manually making sure the timesheets used in payroll figures match the invoice figures. New agency contractors on timesheets will have to be identified manually and set up on the PAYE system first. And if there are any mistakes or amendments to the input data, the process will have to be repeated. The time involved is too much time to be practical beyond 20+ contractors.
Risk with un-intentional changes
Spreadsheets are vulnerable to un-intentional changes when handled by more than one person. A large payroll simply cannot be managed by a single person and will invariably need a team leading to unintentional and unauthorised changes that can go completely unnoticed. Such scenarios can affect not just the current payroll run but all future payroll runs until the mistakes get noticed by someone. And if you have to run the payroll multiple times in a week, duplicate payments are not prevented by traditional PAYE software systems. The risk is simply too much to accept by any serious Umbrella Payroll company with the intention to grow.
Lack of Audit Trail
Spreadsheets are not designed to maintain historical changes. Amendments, reversals etc. get simply overwritten by the previous instances. Mistakes made go unnoticed totally. A company will have no means to trace back the reason for changes and the user who did it. A very vulnerable position for a payroll business to be in.
Umbrella payroll business is not anything like a payroll outsourcing business. The contracting company is an important part of the labour supply chain that employs the contractors, supplies labour supply services to agencies. A scalable successful business cannot do without systems such as a CRM, Financials, Payroll, Agency and Contractor Interface portals, HR etc. And since each of these systems exchange data with each other on a real time basis, it’s essential that they are seamlessly integrated without relying on manual off-line transfers. Fragmented processing using traditional PAYE and accounting systems that rely on spreadsheet calculations and data transfers will simply not fit the bill.
Lack of Reconciliation Tools
With so much sensitive data processed by an umbrella company, its business critical to reconcile end to end figures on a weekly basis, if not daily basis. Any discrepancies over Financials vs payroll calculations, Payroll margins vs P&L statements, bank transactions, unpaid timesheets/expenses should be spotted, reasoned out and fixed week on week basis. This is only possible with a comprehensive set of reconciliation tools and alerts built for the purpose. Manual reconciliation can only take a company so far that the business will stagnate even before it can break even.
Intelligent 3rd Party Integrations
As the business grows, it’s essential to integrate critical processes such as Banking, E-signature, ID verification etc. These are all specialised areas that even a sophisticated payroll software will attempt to do. Instead a comprehensive Umbrella Payroll software such as Primo Umbrella will have integrated with 3rd parties to provide these services. A robust integration will be more than just facilitating a data exchange service between the systems. A solid workflow within the payroll is the key to an intelligent 3rd party integration. The emphasis is to take the stress from the user of having to learn every 3rd party system.
Statutory Compliance Risk
With the need to run payroll multiple times in a week and often rerunning payroll for people who have been already paid poses a serious risk to growing umbrella companies with possibilities for missed/late FPS. Auto enrolment obligations pose its own risks as the workforce of an umbrella business is very dynamic. New employees enrol and existing ones leave in big numbers each week. Traditional PAYE systems are not designed to handle bulk P45 processing, re-assessment for AE within the same week. Failure to comply can result in penalties and administration costs.
Why use Primo Umbrella Company
Primo Umbrella is designed, developed and continuously enhanced by Accentra Technologies, a company who has helped several thousands of customers with its Payroll and Financials systems since 1979. A long legacy and a very rich expertise in payroll and finance services make it the best suitor in the industry. While there are other software companies who specialise in payroll and finance domains, none of them have taken the initiative to create a solution for Umbrella Payroll businesses.
Pioneer in ERP solution for Umbrella Payroll Businesses
We are the pioneer in launching a fully comprehensive ERP platform for the Umbrella industry, way back in 2006. While the lesser competitors in the market thought of Umbrella payroll business as merely a sophisticated payroll outsourcing business, we recognised the complex supply chain process and the need for an ERP solution. Our very first release in 2006 was a fully integrated CRM, Payroll and Financials working seamlessly with each other. Since our first launch we have helped hundreds of umbrella companies to save money, increase efficiency and grow their business.
Up to date on Technology
We have never shied away from embracing the latest in technology. We were the first and the only provider to provide web based simple umbrella solutions in the market and also were the first one to launch a mobile app. Today all our solutions are cloud based and updates are released automatically twice a month. We have set-up a robust continuous development, testing, integration and release system using the state of the art technologies and tools. We also take security seriously and conduct regular security audits on our software and servers.
Multiple Range of Payroll Models
When you sign-up to Primo Umbrella, you have access to not just the standard umbrella model but seven different payroll models each targeted at a different audience. Each model is designed to help you go out in the market and get new business. Your success is ours too and we spare no expenses in providing you with the best.
Built-in CIS & Self-Employed Payrolls
Out standard licensing also includes pay and bill solution for self-employed market both CIS and non-CIS. True to our legacy, we don’t treat self-employed payments as PAYE payroll as many others do in the market. A PAYE system just pays people ignoring the rest of financial elements which are the bulk of the processing. What we offer is a true supply chain solution where the contractors are your suppliers and they get paid through a purchase ledger system. Timesheet to balance sheet – everyone benefits from our umbrella company payroll software.
Click here to read about Primo Umbrella Payroll Advantages
Explore Primo Umbrella Today
If you are currently in the market for a reliable payroll system that can be tailored specifically for an umbrella company like yours, then look no further than Primo Umbrella. Equipped with various useful tools and features, this payroll software is designed to make payroll processing a quick and straightforward experience.
Please use our contact details below or complete the form on this page to request a free demo.