What we have here is…
…a failure to educate or, how putting processes into poorly trained hands leads to cock ups.
Last week I spoke about how poorly implemented processes lead to unwieldy and complex processes. This week I’m talking about how a lack of training exposes basic problems in critical processes.
Having (mostly) nailed down controls and processes on revenue for the wee cooperative I’m helping I turned my attention to costs.
I thought payroll would be a good place to start since it was being managed by the firm’s accountants. This usually makes sense for a small business because U.K. payroll can be a nightmare. The potential to stumble into regulatory minefields is enough to recommend handing this process off.
I didn’t realise that once again, I was looking at systems that were not connected and that it was assumed that the local admin staff would magically know what to do. This conversation extract between the accountants and myself gives an idea how this is going:
Me: I see that there is an API based integration between the payroll and accounting back office. But I can’t find that on the payroll dashboard. That might be because I don’t have admin rights. Can you help?
Accountant: It might be because you’re using a different version of the software.
Me: What? Does that mean I can’t get the integration?
Accountant: I’ve not seen this with your accounting system before but I think it exists. I’ll have to check. You’ll need to tell me how you want the accounts to be mapped to the general ledger.
Me: OK. When doing that can you tell me if we can allocate staff to different cost centres?
Accountant: I’ll get back to you.
I live in hope.
Moving on I looked at the cost of getting payroll done. I was horrified to discover that it is 5x where I expected it to be and that the coop is charged for people who have never been paid in the current tax year because they’re still on the payroll. Duh?
In addition, the person responsible for drawing up payments to staff has no oversight, Neither does that person understand the connection between a monthly payroll and the amounts due to be paid to HMRC.
I discovered this when reconciling what should have been on the PAYE account and what is due. It turns out that PAYE paid last month was for the wrong tax period. Endeavouring to explain this revealed an almost complete lack of understanding about how PAYE works.
I can readily argue that this experience supports my thesis that payroll should be left in the hands of experts. But, the extent to which the basics, in this case, is little short of dangerous because the risk of falling out of compliance is magnified.
So…once again I’ve got processes to sort out and education to undertake designed to solve a problem. If I can get the processes automated then so much the better.
Once again, wish me luck.
Payroll is hard.