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I.T. in practice: Set and forget

Every Issue

Cite as: December 2011 85(12) LIJ, p.79

Using readily available payroll modules can pay off.

The two largest operating expenses for legal practices are occupancy costs and staff expenses. Unless a practice intends to operate out of a virtual office, there is not a lot that technology can do to help with maintaining a firm’s premises.

However, staffing costs is one area where technology can help, most commonly with payroll (or human resource) systems.

It is rare for a practice management system to deal with the ongoing payroll requirements of a firm. Primarily, this is seen to be a highly specialised area which is subject to changes each year, or even more frequently. Also, there tends to be no operational link between the hours that employees are paid for, and the hours that are recorded against files (if a timesheet system is being maintained). The exception is where a firm might have a bonus system linked to billable hours; however, most firms tend to base their incentive payments on other performance criteria.

Where a firm uses an off-the-shelf accounting package for its management reporting and tax requirements, this package may have a module for paying staff. These modules are also able to manage many other aspects associated with staff, such as leave accruals and entitlements for annual, long service and personal leave, and annual regulatory obligations such as pay-as-you-go tax and end-of-year payment summaries. Payroll modules also make the task of managing employee superannuation processing easier.

For many practices that continue to maintain manual or near-manual systems (computer-based spreadsheets or word documents), knowing where to start with the implementation of a payroll system can be problematic. However, the three basic steps are to locate and centralise all payroll-related information, to ascertain and verify all leave entitlements at a particular point in time, and – most importantly – to ensure that all payroll-related systems are absolutely secure so as to protect this sensitive information. This often requires that the person processing the pay runs has their own printer (for payslips) or secure email address. Processing the first pay run in the new system can be done as a parallel run situation, so that the practice can be confident that the payroll system is recording and reporting information the same as the old processes. This is qualified by the fact that some implementations expose previously incorrect calculations in things like leave accruals or hourly rate calculations.

In any payroll system implementation, it is important that more than one person in the office has access to the system, and is able to operate it correctly. In smaller offices, the practice principal often undertakes this role.

Many practices do not realise that their existing account system may have a payroll module in it. If this is not the case, such an add-on module can cost $300 to $500. Stand-alone packages will range from $200 to $700 or more, and are often priced based on the number of employees. It is important to maintain an upgrade agreement with such software, as this will provide ongoing updates to tax scales and other important module features (as regulatory regime changes take place). Although regular updates are relatively easy to install, many firms request that their external technology consultants perform these upgrades as part of a regular maintenance schedule. As such, the accumulated costs of staff time in processing payroll, upgrades, software acquisition, and other associated activities contribute to a technology cost which needs to be assessed in the light of other available options.

One option is a web-based external payroll software service. Under this arrangement, an off-site service provider provides a number of web-based information pages where basic data – static and regular payroll – is entered. The web service then either does the bank transfer, or provides the file for the practice to do its own bank transfer payments. This covers not just employee payments, but also those to third parties such as superannuation funds. These systems can email payslips to employees or provide them in a format that the practice can deal with itself. The costs of these services will vary based on the level of service contracted, and the number of employees. However, a practice with a principal and about 10 staff would normally pay in the range of $100 per month in ongoing costs (setup costs vary significantly).

One advantage of an off-site service is that all regulatory changes involving software or data updates take place without disruption or cost to the firm. These systems often provide a web interface for employees to access their payroll information directly, as well as apply for leave and confirm leave entitlements.

Payroll is a sensitive area for a practice, and a major cost. Firms can greatly improve employee morale simply by using readily available payroll software modules, packages, or services to do the job.



ADAM REYNOLDS is the principal of Proficio, an independent IT consulting firm. To contact him, ph 0413 487 640, email adam@proficio.com.au or see http://proficio.com.au. For more IT in-practice information see the contributions of the LIV Legal Practice Management Committee and IT e-Marketing Department at www.liv.asn.au.

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