Making payroll simpler for SMEs

Sage Salary and Supplier Payments, powered by Modulr, will help SMEs save time and money processing payroll and invoice payments. By reducing time-intensive, manual admin, improving data security - and facilitating instant payments to suppliers and employees - they will be able to take greater control of their cash flow. Myles Stephenson CEO at Modulr explains.

Businesses must be able to pay people on time to survive. This is particularly true for small and medium-sized enterprises that may have a complex ecosystem of external agencies and freelancers to pay.

But it can be a challenge because payroll calculation is a complex process with a growing administrative burden. For example, General Data Protection Regulations (GDPR) puts stringent rules in place governing how companies manage payroll information.

All the while, SMEs must adapt to how the world of work is evolving. The gig economy and the move towards more flexible working practices are creating different expectations of the immediacy and flexibility with which people are paid. Suppliers doing a few day’s work do not want to wait weeks or months for payment. Many businesses are also grappling with how to provide benefits to freelancers, who should provide them, and how they are calculated.

Moving on from manual processing

All these factors make payroll calculation more challenging - so many firms still use manual processing and inadequate systems to do it. According to Sage research, nearly one in five businesses are still using manual processing for payroll. Modulr has found that 40% of UK businesses rely on Excel files to manage their salary and supplier payments, with 20% of payroll bureaus using Excel to manage clients’ salary payments.

There are numerous issues with using manual processes and non-optimal software such as Excel to administer payroll. Firstly, it’s immensely time-consuming, which is a huge strain on the already limited resources of an SME.

Secondly, manual processing increases the likelihood of human error and fraud. This could mean that payments don’t happen on time, which could be hugely problematic for a business dependent on strong supplier relationships. At worst, it could lead to sensitive payment data being compromised, a security risk that could spell disaster.

Filling the automation gap

One way that SMEs can alleviate the administrative and technical burdens of payroll calculation is through automation. Sage recently partnered with Modulr to create a new solution that simplifies the task of managing accounts payable and payroll payments for businesses.

Sage Salary and Supplier Payments, powered by Modulr, allows business owners, payroll managers, payroll bureau and accountants to securely manage and process payments from directly within the Sage Accounts and Payroll products. It is delivered to Sage customers, who represent 60% of the UK’s SME market, using Modulr’s payments-as-a-service API. This provides access to faster, easier and more reliable end-to-end payment services through one simple integration. 

The solution offers numerous benefits to accountants and payroll managers at UK SMEs. It represents the end of convoluted manual processes, replacing error-prone batch processing with programmable automation. This not only reduces the time spent by payroll managers and accountants on these activities, it improves the security of the relevant data.

It also gives accountants and payroll managers more flexibility, letting them process and approve payments whenever needed, instead of at specific times of the month. This, alongside Modulr’s 24/7, real-time payments, means that suppliers and employees can be paid instantly and at any time. There is no need to be restricted by bank hours any longer, which is incredibly useful for SMEs that do not operate on the strict 9-5, Monday-Friday timetable.

The solution also offers delegated service access, which lets the accounting practice seamlessly control and manage payments processing on behalf of their entire client base. Accountants can instantly set up as many payment accounts as needed for each of their clients, removing the complexity of managing multiple clients manually.

Myles Stephenson

Myles Stephenson CEO Modulr