Zarah ChoudharyPayments company Caxton has released research showing that half (52%) of employees had been paid late due to payroll problems, with reliance on BACS systems a central issue.
According to Caxton’s findings, nearly 20% of businesses have to process follow-on payrolls every month to fix errors caused by BACS failures.
More than a third (35%) of payroll professionals reported having no backup system for when BACS breaks down.
The research found that 5% of payroll professionals received weekly complaints, with 22% dealing with monthly grievances.
Payroll professionals spent 16% of their time rectifying payroll errors, costing businesses more than £6,700 annually per employee in lost productivity.
Additionally, 20% of payroll professionals were required to work overtime due to system failures, while 38% reported finding their jobs stressful.
Rupert Lee-Browne, CEO and founder of Caxton, said: “From the Covid pandemic to inflation, recent years have thrown unprecedented challenges at businesses of all shapes and sizes.
“Building resilience in business to withstand the unforeseen is key.
“What our latest report reveals however is that many businesses out there are lacking this resilience when it comes to payroll.
“A business relies on its people so payroll problems that might leave staff unpaid can have a real impact on staff morale and retention, not to mention the personal and financial lives of employees.
“Our latest report reveals the extent of this potential impact, with large numbers of employees indicating that a lack of payroll resilience could incentivise them to find a new employer.
“What comes through loud and clear in our latest survey is that businesses which lack payroll resilience leave themselves vulnerable to a range of externalities, and put themselves at a competitive disadvantage.
“Changing labour markets and competition from a growing fintech and paytech ecosystem are forcing payroll to adapt.
“While investing in new solutions isn’t always easy, the cost of doing nothing is growing by the day.”
Natasha Taylor, consultancy relationship lead at Chartered Institute of Payroll Professionals, said: “In an era of increased workforce mobility, economic uncertainty and technological innovation, the demands placed on payroll systems have never been more critical.
“This research from Caxton reveals how over-reliance on legacy payroll systems exposes both businesses and their employees to a range of vulnerabilities.
“We hope this report inspires meaningful discussion of these vulnerabilities and how technology can help mitigate payroll risk in 2025.”
