Supply and Demand

This month, lots of ABM members have reported an unusual spike in new business. I want to review what’s driving this increase and look at how payroll bureaus need to respond. 

This increase reflects a continuing trend, ever since the COVID epidemic and before, for the UK SME sector to outsource more of their administrative and support services. Payroll is seen as a prime candidate for outsourcing due to the massive increase in regulation since 2012. SME directors now recognise that the cost of getting payroll wrong, incurring financial penalties, suffering reputational damage or, worst of all, engendering employee dissatisfaction is too much of a risk.  

There are other shifts taking place across the industry. Notably we’re seeing firms of accountants who might, historically, have entrusted the management of client payrolls to the receptionist, an administrator or to an accountant in their spare time, deciding to divest themselves of the responsibility and pass their payroll business to a bureau.  

So payroll bureaus are getting busier and busier and I want to consider how the industry is coping, and what strategies bureau leaders might adopt to protect their business, their clients and their staff.  

In my experience, very few payroll bureaus are operating with excess capacity. So far, they have managed to ‘soak up’ all the extra regulation and the extra business but the industry is struggling to satisfy demand. One bureau leader described the current situation to me as “unsustainable”. In many ways, payroll bureaus are simply paying the price for being too nice! 

• they provide an outstanding level of service 

• they care passionately about paying their clients’ employees ‘accurately and on time’ 

• they tend to over-deliver their service, always going the extra mile to satisfy that request for a little more help.  

• The question “can you just…” generally gets a “yes” and they might well deliver that additional piece of work without charging for it 

• overall, they are cheap. Can’t say it any simpler. 

Bureaus have overdelivered and underpriced their service for too long and it’s time to face reality.  

PRICES MUST INCREASE 

Higher fees will allow bureau leaders to invest in technologies to improve efficiencies, to invest in staff skillsets beyond pure payroll, to build capacity so that they’re better placed to handle unforeseen events; and to invest in staff remuneration so they can attract the best talent.  

The ABM exists to help bureaus gain a competitive edge through connection, shared knowledge and business support. But we realised that, often, bureau leaders might lack the commercial experience and confidence to build REAL VALUE in their business.  

We have decided to change all that. 

We are about to launch our business strategy & development program – a practical introduction for UK payroll bureau owners who want to build confidence in their brand, strengthen the value of their business, and improve how it runs day to day. We are running a free introductory webinar at the end of April, open to ABM members and to people who are thinking of joining.