Finance: Cut payroll problems

A number of pub companies are now choosing to outsource control of payroll.

There are few more sensitive matters between employer and employee than the subject of pay - and it's not just a question of how much. Getting the right amount on time every week or month with no slip-ups is just as important.

Accurately sorting the payroll is a major labour intensive exercise for head office staff at most companies. But many pubcos are finding a solution through outsourcing.

Handing over the task of collecting data and ensuring that weekly paid staff are paid correctly and on time not only takes the pressure off in-house finance and admin, it can save time and money too.

The market leader in providing payroll services in the UK, with almost 30 years experience, is Ascent Technology, which manages more than £11m in BACS payments on behalf of clients.

The firm combines its expertise with an effective use of technology to address the specific needs of individual companies and just over a year ago it set up a team to service the hospitality industry.

Since then it has won contracts with a number of pub companies including Yates Group, Wizard Inns and Eldridge Pope. "In the licensed trade the need to control overheads, especially the wage bill, is critical," said Ascent business development manager Colin Charlton. "With a staff turnover that is traditionally high, operators can benefit enormously from the kind of service we can provide."

"Because of the time freed up, finance and admin staff can focus on analysing business performance, leaving the burden of input and calculation to others.

"The number of companies considering outsourcing is increasing because business is under increasing pressure to perform, to reduce unnecessary cost, to focus on core competences and, if worthwhile, entrust some low-impact processes to established professionals."

Colin sees payroll as "essentially an admin process that fails to utilise the skills of the finance department to best effect.

"The situation becomes ever-complicated and can lead to inaccuracies in the data supplied to head office as well as in the resulting payroll run. The seasonal influx of temporary staff, all demanding payment that is correct and on time, every time, and constantly changing legislation creates further demands on an already stretched resource. This is all done with an ever-present risk that something might just go awry."

Colin recognises that companies may have misgivings about handing over something as sensitive as payroll to an outside specialist, however good or reliable they may be. In more than 15 years in the business, he's heard all the concerns.

"We appreciate the sensitivity of moving a critical process to an external body and that cultural issues can appear overwhelming at first," he said. "But with careful planning the results can be dramatic.

"Ensuring the client is always in control of their payroll is paramount and they have access online 24 hours every day."

Another worry expressed by pub operators is that their managers already struggle to cope with payroll deadlines and often need someone at HQ to bail them out. Colin has little time for this argument.

"Unit managers are employed today to be entrepreneurial and take pride in growing their own part of the business," he said. "Old, manually-driven procedures should not be used to restrict information flow.

"At best, companies rely on an Excel spreadsheet which is little better than asking the unit manager to use a crayon and paper! What about simplifying the data input tasks for the unit manager and selling them the benefits of meeting deadlines more easily? At the same time, you can remove the need for the finance department to chase for information."

Ascent offers a range of services and solutions based on its own payroll software. Customers can choose between a simple bureau service, a fully managed service or a hosted solution, according to their needs.

It evaluates each client's payroll process before agreeing a solution taking into account the views of all "stakeholders" including employees, pub managers, the operations team and the finance department to ensure the service addresses the key issues.

Ascent believes multiple operators with as few as three pubs can benefit from the service, which can be tailored to the needs of each business.

Colin says 50 per cent of organisations are open to outsourcing. "The remaining 50 per cent will either not consider it because they are simply averse to change or the finance director naturally defends the payroll team." Eldridge Pope, which employs 2,000 people in its 174 pubs across the south of England, is one company that's pleased with its decision to outsource.

"We only pay for the volume of service we use," it says. "Nothing stands still, the needs of the business today and tomorrow will differ from those of yesterday and Ascent is working with us to meet the challenges we face in the delivery of a payroll service."

For Yates Group, with 3,500 employees, Ascent implemented a simpler process for collecting payroll data which was easier for barstaff to use, and provided a better computation process at head office.

"Outsourcing responsibility for payroll processing means that management at head office, and in the estate, can concentrate on running the business without the worry of payroll deadlines," said Yates' operations finance manager Mark Coverley.

Ascent works it's magic on Wizard​

Wizard Inns is one pubco that has successfully transferred the payroll burden for staff in its 65 pubs to an outside company.

The decision to use Ascent Technology is in keeping with the operator's philosophy: "100 per cent focus". Not having to run the payroll leaves Wizard free to concentrate on running its pubs.

"Transferring the burden of payroll administration to Ascent allows my team to focus our efforts on supporting the operational aspects of the business," explained Wizard's finance director Geoff Jones.

It was not a decision taken lightly, however. "Our employees are crucial to our success and ensuring their pay is correct each and every payday is vitally important," he said. "Running payroll internally creates a pressure on the finance team and demands full-time professional attention. "We do not want to be payroll professionals, Ascent can provide that role for us."

Outsourcing the payroll has not only improved the service to frontline staff, it has proved "cost neutral" in terms of the company's profit and loss accounts.

"However, the time we have gained, with a reduced head count, has meant that finance can focus its energies in a more productive way in support of the business. Everyone wins," said Geoff.

Two staff had worked on payroll full-time, with two days of support from the finance manager. Today one person analyses payroll costs as part of their overall function and, as Geoff points out, "No overtime is required to meet the payroll deadlines. Tuesday nights are now free!"

The move was prompted by the acquisition of 20 pubs from Regent Inns two years ago. This placed huge additional pressures on Wizard's finance, admin and operations team.

Ascent provides a service which empowers pub managers to input data which is validated online. They submit data on starters, leavers and hours worked electronically, and liaise direct with Ascent on payroll issues.

Comprehensive reporting and analysis is completed in time for the Monday morning operations team briefing giving the company real-time cost analysis for all staff within each pub.

The system allows Wizard to retain control of data, to handle on-line enquiries and personalised reporting and analysis. It no longer requires local payroll expertise and management issues around holiday cove