Newbury Business Today

Lifting the lid on payroll

12th January 2012

Email: richard.maynard@newburynews.co.uk

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Richard Maynard talks to Nick Butler, director of JC Payroll Services, part of Thames Valley firm James Cowper

TO win a regional or national award is a feather in the cap of any company, but to be crowned the best in the world truly is an achievement.
For Newbury-based JC Payroll Services, 2011 will be remembered for doing just that. The company, which is part of Thames Valley accountancy firm James Cowper, was named best payroll partner in the world by Celergo, a leading payroll provider based in the US.
The figures speak for themselves:
n 480 separate monthly payrolls
n Each month more and 10,000 people rely on JC Payroll Services for their monthly salary
n Monthly payroll of circa £25m per month (i.e. total value of payrolls processed)
n In 2010/2009 JC Payroll Services managed a combined payroll of more than £120m
n The biggest single payroll has value of £5.6m per month
Director Nick Butler said that JC Payroll Services was Celergo’s only UK partner, one of 192 in 115 countries. The award gave the company huge amounts of positive press coverage worldwide.
“Celergo has been absolutely brilliant for us as a bureau, not only in the work that it’s given us, but also the confidence that it’s brought. We’re not just a little payroll office in the middle of Newbury. We are actually doing multi-national payrolls for large corporations. And we are still just as happy to look after ‘Joe Bloggs’ and his one-man payroll. That’s probably why our clients like us – everything we do is based on customer service.
Payroll work only makes about five per cent of James Cowper’s total workload, although that has doubled in the last three years, according to Mr Butler. “We’ve grown faster than the rest of the business, which has grown quite nicely as well. But to double in three years is challenging.” The payroll staff has gone from four to eight, but the company has retained all of the clients from when it was a small operation. He said that the firm had resisted the temptation to give up smaller accounts in favour of the ‘big money’ clients.
Why are more companies looking to outsource their payroll operations? “It does save time. For the majority of employers, payroll is a job that is not big enough to have one person doing full time, therefore it becomes part of someone’s job, or the owner-manager has to do it, and ultimately what outsourcing does it free up their time, normally their Sunday afternoon, or an evening.
“What we like to do is say that it gives the employer a fixed cost, and a known scope of service. So when you employ someone, you have their performance issues to worry about. We work to service level agreements so we have to provide that level of product, so you don’t have to worry about performance levels of people who work for you, sickness, absence or any of the other things that get in the way. For most employers, they don’t need a dedicated payroll person, and that’s why some companies go for big clients, but we want to go for all employers.
“It rationalises cost, frees up time and guarantees the standard of product – those are the three main things, as I see it.”
JC Payroll Services works to a fixed fee which it does not change during a tax year without the agreement of a client. Surprisingly, the difficulties experienced by businesses since 2008 have not resulted in the emphasis on cost-saving that might have been expected. “Our fees were probably too low for many years, and we took the conscious decision to increase them on new quotes by possibly 25 to 30 per cent on what we had been quoting, and were still winning the business. I think we had fallen a little bit behind the market rate – it’s hard to tell clients that, but for new clients, we had a look at what the market was. Payroll is a funny beast – you can get payroll payslips for a pound a go. You could get your payroll of 10 people done for £15, where we would charge £60 per month, which is a big discrepancy. But we are BACS- approved, which means that we can make any payments to any third party for clients. You could find considerably more expensive bureaux. People will pay the money if they know the supplier’s name.”
Had there not been a recession and all of the problems that it brought, Mr Butler estimates that the firm’s business might have grown by 20 per cent more than it did. “We have had losses – companies going out of business – but not as many as I thought. It seems to have been very industry-specific – construction, definitely, has been hit, but there have been technology companies paying salaries, commissions and bonuses as high as they ever have. It really does seem to depend on what industry you are in.
The bulk of JC Payroll’s clients are in the Thames Valley, which has, to some extent, shielded them from the worst of the downturn. The M4 corridor continues to be the firm’s main focus.
So what of the future? “I think we will double in size again inside four years,” said Mr Butler. “Some people say ‘that’s slower than before’, but we are twice the size we were before. We have very good potential pipeline locally, and we have been warned by our friends at Celergo that 2012 appears to be a very bumpy year. They have warned us to get some staff. Our biggest achievement would be to retain the award for a second year.”
There is no doubt that technology has revolutionised the payroll business. While some staff are still paid in cash but payroll was one of the first business processes to be automated. Mr Butler said: “If I had to do 11,000 payslips, with a team of eight, even 15 years ago I would have needed one person per 500. Now, it’s less than half the cost, and bureaux couldn’t trade.”
This year, the firm is even launching a new website to enable clients to send and receive data over a secure link. “Technology is helping us. It won’t save a lot of money and cost, because we have to post out the payslip – we have that postage cost. We offer an e-pay service but people don’t like e-pay slips. Will we ever get a paperless office? Not in payroll, I’m afraid – the Revenue will always want paper. But without technology, you    couldn’t run a bureau.”

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