Payroll mistakes cost FTSE100 businesses up to £30m
25 November 2015
According to research from PwC (PricewaterCooperhouse) payroll errors cost the average FTSE 100 company between £10m and £30m per year.
This statistic forms part of the findings of PwC’s report ‘Making payroll pay: Managing risk and compliance in an unprecedented era of change’.
With employment taxes now globally the largest source of government income, contributing on average 38% of the global total tax take and 43% of government revenues in the UK, payroll is coming under scrutiny as never before.
Tracking individuals to determine taxability on a country-by-country basis is already one of the hardest challenges that organisations face in order to be fully compliant with current rules, PwC says.
However, the challenge is set to become tougher. PwC surveyed 193 global organisations - 89% said they expect international mobility to increase, mostly through short-term assignments and international business travellers, rather than more traditional long-term assignments.
Chris Watt, Payright business leader at PwC, said:
“Organisations are struggling with the increasing complexity and global nature of payroll. As they increasingly look beyond domestic boundaries, the complexity of their payroll operations grows too.
Its crucial businesses have a payroll that’s not just fit for today, but is capable of dealing with the increased complexity and regulations coming in the future.
Technology and social media are making employees better informed, more connected and more vocal – get their payroll wrong and with the power of social media you and the wider world will very quickly get to know about it.”
Global mobility also adds complexity to the payroll process in a number of areas including:
- Secondments, dual contracts, split payroll, business travellers
- Currency translation/split payments
- Late reported payments, corrections and trailing income
Chris Watt, Payright business leader at PwC, added:
“The landscape has changed; the rapid rise of social media, smart devices, big data and cloud computing has opened up avenues for improvement. At the same time, employees are becoming more savvy through demographic change, increased expectations and empowerment.”
PwC’s research paper looks at the payroll function and process through a number of lenses based upon the external challenges that organisations currently face:
- Globalisation and the impact on payroll operations.
- Payroll technology in the Digital Age
- Risk management
- Regulation and Compliance.
Read the full report: Making payroll pay: Managing risk and compliance in an unprecedented era of change.