Advantages of Payroll | The Benefits of Payroll Management Software

By alisonbarlow|Feb 7, 2025|10:34 am GMT

Advantages of payroll software

Over the last four years, errors and missed reporting have cost UK businesses a whopping £75 million in payroll penalties, 26% of which were racked up between April 2022 and April 2023.

These are avoidable costs that represent a significant financial burden. They also occur with alarming frequency. In a 2022 survey, 91% of businesses in the UK and Ireland reported making payroll errors every month. For those with 500 employees or more, the cost of those mistakes can top six figures.

The advantages of using payroll software

While haemorrhaging hundreds of thousands to HMRC frustrates business owners nationwide, hospitality operators simply can’t afford the hit. Industry margins have been shrinking for years and will face even greater pressure come April 1, 2025, when employer National Insurance Contributions (NIC), business rates, and the national minimum wage are all set to rise. Handing over additional cash because of errors with payroll services only worsens the blow.

Payroll management systems offer a solution. These platforms typically centralise payroll information and automate much of the payroll process, helping to improve reporting accuracy and avoid errors in tax filings.

What is payroll software, and why does my company need it?

Hospitality has several relatively unique characteristics. It boasts a workforce with skillsets ranging from mixology to maintenance and employs many part-time and seasonal workers on various terms and contracts. Add in a culture of shift-swapping and the need to distribute discretionary tips, and managing payroll becomes particularly challenging.

Errors in payroll processing can be costly—both financially and reputationally—and can be introduced at any point in the payroll workflow. Missing or outdated employee information, incorrect payroll data for overtime or absences, and human errors in tax and NIC calculations all cause mistakes in reporting.

The advantage of a payroll management system is that it streamlines payroll processing, reducing the chance of errors at every stage in the process. These platforms centralise employee data and automate tasks such as calculating wages, taxes, and deductions, reducing the chance of incorrect information and miscalculations.

What are the benefits of using payroll management software?

Boosting efficiency and delivering cost savings typically drive operators to seek supportive payroll services. Most want to reduce the administrative burden on their teams while limiting costly human errors in payroll processing. But the benefits of payroll management systems extend far beyond this; these platforms can improve data security, boost employee retention, and position your business to make the most of growth opportunities.

Time saving

Payroll management systems all work a little differently and offer various functionality. However, all centralise payroll information from across the business, limiting the need for data entry into multiple systems.

This immediately removes a time-consuming job from managers and HR teams and ensures employee data is stored in one place, making it easier to spot any missing payroll information. Centralising data also allows for the automation of standard processes, like benefit and tax calculations. This saves time for teams who might otherwise have to calculate both manually and eliminates the chance of human error in tax filings.

Cost savings

Payroll errors are thought to cost UK businesses a staggering £150,000 a year. Payroll software offers frameworks and automation to mitigate this and limit these avoidable expenses. By automating calculations and flagging mistakes before submission, payroll software can minimise the financial risk of misfiling and help to ensure compliance with tax deadlines and regulations.

Payroll services can be particularly useful to small and medium-sized operators who can’t justify large payroll or compliance teams. For instance, Fourth’s Payroll Bureau Service helps address knowledge gaps within the business cost-effectively, providing access to specialist payroll partners who can help navigate legislation updates or complex requirements, reducing the chances of human error or penalties.

Accuracy

Teams need to have complete faith in the accuracy of the payroll data available if they have any hope of correctly completing and reporting monthly payroll. Yet, accuracy is an ongoing challenge for businesses that manually process payroll, particularly if HR and Payroll teams work independently and there’s a delay in updating critical information like absences or sick leave. Hospitality has the added complexity of a workforce with different pay rates, contract types, benefit entitlements and working hours.

Payroll software that integrates directly scheduling systems streamline this process by automatically tracking and updating real-time data, such as hours worked and roles performed. This eliminates data silos and reduces manual transfers between systems––another task that can lead to errors in data.

By applying rules-based calculations to real-time data, payroll software significantly improves accuracy compared to manual processes. Fourth’s payroll management system takes this further by automatically incorporating legislative updates, like minimum wage increases, reducing the chance of customers overlooking these updates.

Data security

Using payroll software allows operators to consolidate sensitive employee information into a single, secure system. Many payroll management systems include access controls and permission settings, which deliver the added advantage of only allowing authorised personnel to view or edit certain information.

Fourth’s cloud-based platform, for example, is underpinned by robust data security architecture, including cloud hosting that exceeds industry standards. It includes encryption and disaster recovery protocols so operators can guarantee the security of payroll information.

Employee satisfaction

Payroll errors can seriously damage your reputation as an employer and lower staff morale. When pay is delayed, 25% of workers struggle to cover essential bills, and a third are forced to borrow to make ends meet. Motivating and retaining a team grappling with financial stress and doubting whether they’ll be paid accurately or on time is tough.

Payroll management systems improve accuracy and efficiency, reducing the chance of late or incorrect employee wages. Platforms that integrate with broader workforce management tools also offer staff transparent access to payroll information, reducing anxiety over errors or estimated payments and fostering confidence in the process.

Solutions like Fourth go even further with features such as on-demand pay. Our integrations with Wagestream allow employees to access earned wages early, a benefit that can increase retention, attract new talent, and reduce hiring time—useful in today’s competitive talent market.

Scalability

The hospitality workforce fluctuates throughout the year, especially during peak seasons and events. A payroll management system must be flexible enough to adapt. It also needs to scale with the business as it grows, whether that’s expanding into new revenue streams like takeaway or venue hire or opening up additional sites.

Unlike human teams, which require time to recruit, onboard, and train, payroll management systems can scale up or down instantly to match the business’s needs. Rules-based systems also flag automatically if changes to team size will impact compliance requirements, limiting the chances of errors and penalties.

The benefits of choosing integrated payroll and HR software

Fragmenting HR and payroll processes are a common cause of inaccuracies and inefficiencies. In a siloed system, employee information like absences or holidays isn’t always updated on time in payroll systems, leading to incorrect calculations and payments.

Integrated solutions, like Fourth’s platform, eliminate these issues by ensuring real-time data is available to support HR and payroll processes. This eliminates delays and improves payroll accuracy.

The advantages of Fourth’s integrated payroll software

Trusted by operators from PizzaExpress to Four Seasons, Fourth has over 20 years of experience providing workforce management solutions to restaurants and hoteliers.

Our integrated HR and payroll system boosts accuracy by automating complex deductions like holiday pay, expenses, and contributions. It simplifies managing large teams with variable shift patterns, ensuring compliance with industry regulations and streamlining manual tasks.

With easy integrations, the platform keeps employee data up-to-date, tracks absences, and syncs automatically with scheduling systems. This gives managers more time to focus on maximising employee satisfaction, delivering exceptional customer experiences, and driving business growth.

Want more? Discover these resources:

• A Survival Guide to 2025 HR & Payroll Report
• 2025 HR & Payroll Legislation Checklist
• 3 Steps to Avoid Accidental Non-Compliance with National Minimum Wage
• What do you need to know about April’s new neonatal care leave?
• Employee Email Communication Template: Neonatal Care Leave Policy
• Employee Email Communication Template: National Minimum Wage Updates
• How operators can navigate the 2025 NIC reforms