Payroll processing for education: what are your choices?

13th March 2018

Payroll is one of your school or trust's largest expenses, and payroll mistakes will not only cause hugely disgruntled employees but leave you at risk of hefty fines from HMRC.You have to process payslips and payments correctly on time, every time.

So, if you're looking for payroll processing for schools what are your options? Today, academies have several choices for processing payroll.  You could opt to:

  • Buy back services from the local authority
  • Process in-house
  • Use a managed payroll service that specialises in education
  • Process your payroll in-house but have payslip production and BACS payments managed by a third party

But which is right for your organisation? Things to consider when deciding whether to process your payroll in-house or to have it managed externally:

  • Which method will cost less this year? Over the long term?
  • How can you ensure proper tax filings and payments?
  • How much control do you want over the payroll process?
  • How often do you process payroll?
  • How complex is your payroll?
  • How often do you have to create last-minute payslips?

Why choose in-house payroll?

Depending on your school's internal resources and the complexity of your payroll, it is quite possible that in-house payroll software can produce long-term savings over the cost of continual outsourcing fees. Using payroll software for education also increases your control over employee data and the payroll process itself, so you can protect private information, including wage and salary details.

For larger academies, or those considering providing payroll services out to a number of schools in a trust, processing payroll in-house can offer a number of other important benefits, including:

  • Accurate, timely payroll with a solid return on investment (ROI).
  • Total control over payroll processing, including payslip printing, reporting, and forms, as well as managing direct deposits and payment of taxes with real-time reporting to HMRC.
  • Maximum flexibility over last-minute changes prior to a payroll run.
  • Comprehensive, customizable reporting to help you analyse compensation and plan for the future.
  • More accurate data through integration with internal HR, accounting, and time and attendance systems.
  • Ability to deliver e-payslips, P60s and P11Ds via your employee self-service software.

Note: Check that your payroll software can cope with the specific requirements of a school payroll, for example: term time working, teachers' pay spines, LGPS and Teachers' pension scheme deductions and special allowances.

Why choose a managed payroll service?

Processing your payroll in-house requires expertise, physical space for personnel and equipment and investment in technology. It will require recruiting specialist staff or taking someone out of another area of the business. Many schools decide they would prefer the reassurance and convenience of having a third-party handle their payroll for them. Here are some of the benefits of using an managed payroll service:

  • Minimal up-front investment
  • Reduction in overheads associated with specialist staff and dedicated space
  • Flexibility to cope with peak periods in your business
  • You don’t have to worry about key staff being absent or leaving
  • You don’t have to invest in ongoing training or be concerned with keeping up-to-date with payroll legislation
  • If an inaccuracy does occur, there is a clear channel for claiming reimbursement – you won’t have this option in-house
  • You are entitled to move to a new provider if you are dissatisfied – a lot easier than dismissing or retraining your own unproductive staff.

Employee fraud is not an area you like to think about when you are running a school, but the sad truth is that you are at risk of various dishonest activities if you manage your own payroll department. Whereas, committed payroll providers have technologies that track payroll processes and will alert you if suspicious activity is uncovered or suspected.

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