There’s no doubt that payroll is essential to maintaining a happy and engaged workforce.
In fact, research has found that 24% of employees will start job hunting after just one payroll error, and 49% will begin looking after two – scary statistics for any business owner.
However, while payroll is critical for maintaining a happy workforce, it’s often viewed as a back-office function and simply the cost of doing business.
This severely undersells the potential of payroll! The issue is that many businesses struggle to accurately measure the return on investment (ROI) from payroll software.
In this blog, we explore how you can effectively measure payroll ROI and highlight why modern tools offer so much more than just a payslip.
What exactly is a return on investment?
Return on investment measures what you’re spending (software costs, implementation fees and staff time) versus the value that’s subsequently delivered back to the business.
Why is it important to measure ROI in payroll?
Measuring the ROI of your payroll investment enables you to track whether you’re heading in the right direction.
If you find that your payroll process is leaking money through inefficiencies, manual errors or compliance fines, you have the option to fix it.
Alternatively, if your payroll is running smoothly and driving value, you can analyse the success and look to capitalise on it.
Dispelling the back-office allegations
Historically, payroll has been pigeonholed.
It’s often seen as a necessary admin that doesn’t contribute to the bottom line.
This couldn’t be further from the truth.
Given the right tools, payroll can step out of the back office, shifting from a data-entry function to a central source of insight.
Done poorly, payroll damages employee trust, but done strategically, it strengthens culture, optimises costs and enables better decision-making.
How can you measure payroll software return on investment?
To determine whether the payroll software in use or under consideration will justify the investment, we have formulated a list for benchmarking purposes.
| Area | Assessment | Aim |
| Processing efficiency | How many hours does your team spend on manual data entry and calculations per pay run? | Use software automation to handle tax code changes and calculations instantly, freeing up days of work for strategic tasks |
| Accuracy and errors | How often do you have to make corrections due to human error? | Automation and integration with HR software helps ensure calculations are 100% accurate the first time, preventing costly rework and employee dissatisfaction |
| Compliance risk | Have you faced fines for late submissions or struggled to keep up with changing legislation? | Ensure submissions to HMRC are sent automatically after every pay run, removing the risk of penalties and ensuring you never miss a deadlinePayroll systems are automatically updated to reflect the latest legislative changes, ensuring you’re always compliant |
| Employee queries | How much time is spent answering questions like: Where is my payslip?Please can you send me my P60? | Employee self-service portals, within the payroll software, enable employees to access their payroll documents instantly, drastically reducing admin queries |
| Reporting | How long does it take to pull a report on total labour costs or gender pay gaps? | Real-time reporting in the software turns days of collating data into seconds, with access to meaningful insights available directly in the systemRun pre-built reports on commonly reviewed areas or create bespoke reporting to meet your exact needs |
| Financial wellbeing | Is financial stress impacting your employees? | Integrate with Earned Wage Access (EWA) platforms to give employees the ability to access a portion of their salary before payday |
| System integration | Are you manually copying data from your HR system to your payroll system? | Create a single source of truth by integrating HR and payroll, so any data changes automatically flow into the systemEliminate the risk of human errors associated with manually keying in new data |
| Payment speed and cash flow | How often do you struggle to meet BACS deadlines due to last-minute changes or delayed approvals? | Use Faster Payments integration to process payments closer to payday, giving you flexibility to handle last-minute changes that emerge |
Calculating your payroll software ROI
Here’s a simple framework to calculate your potential return:
Costs
- Annual software subscription: £1,300
- Implementation and training costs (one-off): £900
- Total first year cost: £2,200
Savings
- Hours saved on manual processing: 8 hours per month = £2,400 saved (based on £25 hourly rate)
- Avoided compliance fines: £300
- Time saved on queries and corrections: 2 hours per month = £600 saved (based on £25 hourly rate)
- Chasing missing information: 2 hours per month = £600 saved (based on £25 hourly rate)
- Total annual savings: £3,900
ROI calculation
- (£3,900 – £2,200) ÷ £2,200 × 100 = 77% ROI in year one
- In year two and beyond (without implementation costs), the ROI jumps to 200%
Taking your payroll to the next level
Hopefully, this breakdown has offered some tangible guidance on the benefits of investing in payroll software.
While the upfront cost can sometimes feel like a hurdle, the long-term savings in time, accuracy and employee retention far outweigh the expense.
Ready for the next step? We have a handy guide that walks through the employee lifecycle, exploring common HR and payroll challenges, and the role software plays.
IRIS: pain-free payroll
Ready to take your payroll to the next level? Want functionality that eases your admin and frees you up to be more strategic?
At IRIS, our award-winning payroll solutions equip you with the tools to not only survive, but thrive.
Berita Terkini
Berita Terbaru
Daftar Terbaru
News
Berita Terbaru
Flash News
RuangJP
Pemilu
Berita Terkini
Prediksi Bola
Togel Deposit Pulsa
Technology
Otomotif
Berita Terbaru
Daftar Judi Slot Online Terpercaya
Slot yang lagi gacor
Teknologi
Berita terkini
Berita Pemilu
Berita Teknologi
Hiburan
master Slote
Berita Terkini
Pendidikan
Resep
Jasa Backlink
One Piece Terbaru
