payroll
Finance

Payroll: A Look at How Far Systems Have Come

A good payroll system is important within a business, helping it to keep the company on the right side of the Inland Revenue Service and preserve the reputation of the company as an employer. Organizing your payroll well will sustain employee morale, creating a feeling of stability and comfort for them in the knowledge they’ll be paid consistently. But systems have come a long way to reach the standard they have today. Below is a brief look at the history of payroll.

The early days of payroll 

Although payroll is believed to date to as far back as 7000 BC, when records of payments were chiseled onto slabs of stone, but the concept of payroll really kicked into life in the early 19th century. Mass employment generated by the Industrial Revolution, created the need for businesses to track payments closely.

In the 1890s, jeweler William Le Grand invented the first timecard machine, which would help businesses to track employee arrivals and departures. Later in the 1920s through to the 1940s, performance of payroll would be manual, with employees submitting timecards to a clerk and receiving cash payments or checks in return. 

The arrival of tech for payroll

In the 1950s, tech would figure more in payroll systems, with the first business computer, the Lyons Electronic Office (LEO), being designed to handle clerical tasks. By the 1980s, IBM had muscled in on tech systems for payroll, and the IBM AS/400 became the computer of choice for payroll. Employees had also become able to fax documents for payroll purposes, rather than submit them in person or mail them.

1990s and the use of Microsoft Excel

Come the 1990s and Microsoft Excel was a major presence, with PCs being used a great deal and equipping HR teams with a useful tool for calculating and reporting payroll. Other developments in tech meant employees could email timesheets, rather than fax documents, too. Still, errors were being made in payroll.

The noughties and the magnetic strip

Along came the noughties and the magnetic stripe started to replace paper systems, allowing managers to track the comings and goings of employees. Card readers, which enabled employees to just scan their card near the reader to clock in, also emerged. Biometric technology would follow in 2016.

Payroll and the cloud

Companies must comply with lots of different legal obligations, and mistakes in payroll, such as tax or National Insurance/social security calculations, can have serious consequences for the company. For this reason, companies are moving more towards cloud-based payroll software, which allows them to comply with tax and pension regulations, transfer salaries to bank accounts and provide the authorities with any details they need for tax calculation. 

This doesn’t mean all payments are made online, however. Some business still like to pay by check, especially because of the security some checks offer when it comes to payments. 

Successful payroll software companies

Naturally, the shift to the cloud-based software has benefited some companies hugely. Major companies in the spheres of finance or HR that offer payroll software include QuickBooks, Xero and Sage. 

QuickBooks bridges the gap between small- and medium-sized businesses and is better suited to finance professionals such as bookkeepers and accountants because of its complex functions. 

Xero is useful, however, for the employees because of its generosity with its features. Apps offers them to pay slips and other payroll information on the apps. Sage Payroll, meanwhile, enables businesses to streamline their payroll process and, with a full suite, automate processes involving payments, time and attendance tracking, benefits payments, and recruitment. 

Payroll systems play an essential function within businesses, serving to preserve the company’s reputation and prevent morale from falling. The implementation of advances in technology allows businesses to track their payments, calculate them correctly and perform other functions relating to payments, so that the business can continue to enjoy a good reputation and, just as importantly, avoid run-ins with the tax office.