As long as their wages hit the bank at the right time, the actual payroll processing part doesn’t register for most employees and why would it if nothing goes wrong? Yes sure, that is what we aim for, to run in the background of peoples’ lives by processing their payroll without a hitch and on time so it is easy to see why people think that payroll processing isn’t a big deal.
The reality of course is that a payroll doesn’t always run smoothly and there are many things that can go wrong. So what does it take to get a payroll processed for a customer?
Here is a step-by-step process of some of the elements involved
When processing a payroll the first thing to do is check the file for any extra information pertaining to the payroll. For example, there could be P6 notifications for tax code changes, SL1 forms for student loans, new starter details, AOE’s, sick notes, MAT B1 forms for maternity leave, or there could be specific instructions for that payroll such as where to deliver the payslips or to contact the client with NET figures. By looking at this information first, a processor is less likely to forget it later because they have familiarised themselves with some of the payroll, so they know what to expect on the actual payroll input.
The next step is to back-up the previous period for that payroll. In some cases this has already been done because all of the payrolls get backed up together periodically for safety. Backing up the previous period is essentially saving your work to the current status. This means that if a processor makes a mistake on a payroll that cannot be changed and they need to start over, the payroll software can be restored to how it was before the payroll was started without affecting any of the previous periods.
Updating the Payroll
Then the previous period needs to be updated. Updating puts all of the payroll information for the previous period into the P11d system and allows PAYE to be reported on. It also allows the next period to be ready for opening.
Starting the Payroll
Now we are ready to start the payroll. Upon starting the payroll the processor needs to make sure the pay date and pay period are correct, and so are the payroll start and cut off dates. By starting the payroll they have ‘opened’ the current period and can input the new payroll information. Usually the payroll information is supplied by the client in a spreadsheet format, but it does vary. Some clients have very few employees and so a spreadsheet is not strictly necessary, some clients choose to input their payroll via phone and some clients don’t even have any payroll to input as their employees are on a standard salary each period. Whichever way the payroll is provided to us, processors enter the employees’ details by inputting the provided amounts into their respective fields and checking each employee payslip for accuracy before moving on to the next one. They repeat the process for each employee individually.
Some clients have payrolls that are so large that we make special arrangements with them to provide their spreadsheet in a specific way so the information can be ‘imported’ into our payroll software. Done right, this can increase efficiency and accuracy.
Additional Information (revisited)
Now is the time to process the additional information from the file. Changing Tax Codes with a P6 and entering SL1’s issued by HMRC are usually straight forward, but problems can occur when for example an employer hasn’t provided a P45 or P46 for a new starter, or if they provide the wrong starter information. Another issue could be if the client has provided the payroll information which says that an employee has taken a certain amount of days off sick but the client hasn’t informed us which days or provided a sick note. Other issues include the employer not providing a MAT B1 form for an employee just starting maternity leave, or providing incorrect information on the payroll input itself. In these situations processors need to communicate with the client to clear up any issues before they can proceed with the payroll.
When the processor is satisfied that all of the input information has been entered (including any pay for recently added new starters) and is correct to the best of their knowledge they can move on to what we call ‘running’ the payroll.
Running the Payroll (if needed)
The first thing to do is remove all of the employees who are on the pay cycle but who are not getting paid. This will mean that the employees who are not being paid in this period will not be produced a payslip and will not be included on the Analysis Reports, but will still be added to the payroll cycle for the next period.
Then the processor calculates the Tax and NI for all employees. This ensures that all employees are paying amounts, and that the correct figures appear on the P45 for any leavers, the PAYE reports and the RTI.
Now they make any employees finishing leavers and print their P45. The processor would also take and ‘standard’ salary out of the system so that the payroll software doesn’t try to pay that employee in the next period.
The next thing to do is to run a report called ‘Check Pay Details’. This report tells the processor if there are any errors on the payroll and if there is anything that needs further investigation. For example, if an employee was getting a Tax refund the processor would look into the reason, and so this report would flag that up. The ‘Check Pay Details’ report also shows any overdue reminders and memos, so if an employee had some unique information to be actioned on a certain date there might be a memo attached to the payroll to remind the processor.
After that the processor would run the ‘Analysis Report’. This shows information such as the total Gross and NET pay for the whole payroll, how many employees have been paid and how much Tax and NI has been deducted. It also breaks down the Gross pay into the different elements for the payroll to make it easier for the processor to check that their input is correct, which needs to be done for every payroll.
Attached to the back of the Analysis Report the processor includes what we call a ‘Batch Reports’. These reports do vary from client to client depending on their specific requirements but there are some reports that are standard, for example the Starters/Leavers report. All of the reports together get saved on our netowork in a dedicated customers section under the Pay period relevant period. We also store copies of payslips for quick access, we save in the same place as the reports before the system uploads the payroll dataplan onto our online portal ePaysafe for the client to view and approve.
ePaysafe (Our online Payroll portal)
ePaysafe is a unique, secure facility for our clients to log in to using their individual confidential information. Here they can view their payroll, query any discrepancies, send secure messages to the payroll bureau and approve their payroll files when they are satisfied with them. When the payroll has been approved, the processor who uploaded it to ePaysafe gets an email to make them aware.
Completing the Payroll
Once our customers approve the payroll using ePaysafe we have a few more steps to follow. All that is left to do is print the employees payslips, seal and post out, we offer a number of solutions here including sending to either the company or employees home addresses or if they use our ePayslips service this data is sent across to our ePayslips system, come take a look how this works
Once the payslips are sorted it is time to send RTI data to HMRC (Real Time information), we also send the BACS payments for 90% of our customers, Dataplan sends over £2 billion in wages per year for our customers.
A great deal of our payroll teams see this as a good time to flick the kettle on and give themselves a little pat on the back, content with the knowledge that another payroll has been completed correctly and on time. Well earned, as I’m sure you will agree that there is much more to payroll than most people think!