The cost of payroll software - What to consider for schools, academies and MATS

The cost of payroll software varies between organisations and depends on your requirements. It isn’t just about the cost per employee per month, you also need to think about any setup fees, the cost of parallel runs, training and ongoing costs. This can lead to a number of questions and considerations.

In this article we’ve addressed everything you need to know about the cost of payroll software as well as hints and tips to reduce your overall costs and how to get the best value from your provider.

Understanding the cost of payroll software for schools and MATs

It’s important to understand the total cost of your payroll software. There are the direct costs that you may pay a provider per month, annually or as a one-off. But it’s also worth considering the indirect costs. Staff time to process payroll for example (which can be translated into a cost), the impact of any inaccuracies on staff morale and the additional workload if you need to do a supplementary BACS run to cover a shortfall is another.

Factors that influence the cost of payroll software for schools and MATs

There are a number of factors that can cause the cost of payroll software for schools, academies and MATs to vary.

The size and structure of your school, academy or MAT

The size and setup of your school, academy or MAT is often the single biggest factor that determines your payroll cost. We’ll go into more detail later on in this article.

Teacher pensions and other requirements

Pension processing is a key part of your payroll. The Teachers' Pension Scheme is a 'defined benefits' pension scheme and is arguably one of the more generous in the UK. Processing teacher pensions is crucial and needs to be taken into account when thinking about your payroll requirements.

Schools, academies and trusts will also need to think about things like term-time contracts, maternity leave and supply teachers. While most of these things don’t just affect the education sector, they all have an impact on your overall payroll requirements and thus your cost.

Support and Training

The level of support and training depends on a number of factors, including whether you choose an in-house or outsourced payroll provider. If you are thinking about which is best for you school, academy or MAT, you might want to take a look at our payroll guide for the education sector.

How much support your school, academy or MAT might need is something to think about from the outset. Things like online vs account management vs telephone vs email support as well as monthly reviews are all important features to be aware of. Some providers may charge additional fees for customised support and training options and that can increase your immediate payroll software costs but ultimately provide you with time and money savings in the future.

Integration with Other Systems

Typically, your payroll service needs to integrate withs some kind of HR software so your staff can access their payslips. It may also be beneficial to integrate your payroll service with budget planning software to ensure your staff costs (which are often the single biggest cost to any organisation) are accounted for, reconciled and planned in advance to allow you to forecast and reforecast your budget.

Understanding the different types of payroll software available for schools and MATs

There are a number of different types of payroll software and services available for schools, academies and multi-academy trusts (MATs).

On-premise payroll software

On-premise payroll software is installed and maintained on the school or MAT's servers. Although this can provide increased control over data and security, it also requires dedicated IT expertise. It can also be costly to purchase, store and maintain the equipment. As we progress to an increasingly digital world, on-premise software is becoming less and less popular.

Cloud-based payroll software and services

Hosted by a provider and accessed via the internet, cloud-based payroll software provides easy accessibility, automatic updates, and typically lower upfront costs. It requires a reliable internet connection but that is largely standard these days. If you are a multi-academy trust, the ability to scale with cloud-based software is important if you plan to bring on more academies.

Local authority payroll services

Before the start of academisation, local authorities typically provided the payroll service to all schools. The benefit of this service was that schools didn’t have to think about it because it was a given and as it was run by the LA, the costs were typically at the lower end. In recent times we have seen some local authorities start to step away from providing the service and encourage schools, academies and MATs to procure their own payroll service. This can be a daunting task, even for some of the more experienced staff.

Managed or outsourced payroll service/ Bureaus:

This is when a school or multi-academy trust delegates the responsibility of payroll management to an accredited third-party provider. Payroll service bureaus provide comprehensive payroll services, but the ongoing costs can look higher than an in-house offering. However, be mindful of just looking at those costs, instead, think about the total cost including any time savings. For example, reduced admin time and not having to support (and thus pay) a member of staff or a team to process the payroll.

In-house payroll

If you have an experienced payroll person or team within your school or multi-academy trust, an in-house offering might be the best solution. It allows certified employees to process payroll and pensions. This option is typically selected by schools that have an established existing payroll team and want to increase their control and visibility.

Integrated payroll and HR software:

This is software that combines payroll and HR functions into a single system. Integrated payroll and HR software provides a whole host of benefits in addition to giving employees access to their payslip. It can streamline processes and help reduce costs as an organisation scales but it may require additional upfront costs.

How the size and complexity of your school or MAT affects payroll software costs

The size of your school, academy or MAT

As we’ve mentioned above, the size of your school, academy or MAT is one of the key factors influencing the cost of payroll software. Often the larger the school or academy, the more complex the payroll needs will be. You might have a number of different teaching and non-teaching staff with differing payroll requirements, setups and contracts. All these elements need to be accounted for within your chosen payroll solution.

The general rule is that the more employees you have the more expensive your total payroll bill. That logic goes without saying but with larger numbers you are likely to benefit from economies of scale so the cost per person per month is likely to be reduced. Smaller primary schools for example might also be subject to minimum processing fees in some instances which could add to the total bill and the per person per payslip cost.

The structure of your multi-academy trust

It’s true that larger organisations may require more features or may have more specific requirements. A larger multi-academy trust for example may have schools that sit across different local authorities and/or with a London weighting. A trust needs to be able to support different pay scales. There might also be different pay dates and different PAYE schemes for the academies within the trust. Grouping the PAYE could provide a single reference across the trust resulting in a single PAYE return and payment but it’s rarely that simple and there are often lots of legalities to take into consideration.

Comparing the costs of different payroll software options for schools and MATs

As well as different types of payroll solutions, there are also a range of payroll providers for schools, academies and MATs to consider. We have taken a look at a few and offered some things to think about.

MHR

MHR is a midland-based provider of HR, payroll, analytics and engagement software and services. With a single database, MHR’s iTrent solution is cloud-based and spans HR, talent management, workforce management and payroll. With a focus on teacher pensions and support for the School Workforce Census return, MHR could be a good option for schools, academies and MATS. In addition, MHR sells to colleges and universities which can sometimes be reflected in the cost. Also be mindful of integration with other third-party systems (i.e. budgeting solutions) to reduce duplication and reduce manual processes.

Strictly Education

As a dedicated education vendor, Strictly Education supports over 2,000 schools, academies and MATs and offers an on-demand advisory service through specialist CIPD qualified HR consultants which could be beneficial for schools or growing trusts wanting this service. As with MHR, be mindful of integrations with budgeting and accounting systems.

Civica

With a mature HR and Payroll offering, Civica manages multiple contracts and has a number of customisable reports for its users. Its software applications are used by large and small organisations with customers spanning both public and private sectors. The organisation offers integrations with a number of systems including MIS’.

IRIS

IRIS has its own payroll bureau solution for organisations with 100 to over 2,500 employees. The IRIS Payroll Professional solution (formerly known as Star Payroll) is used to process the pay for over 70,000 UK organisations annually. In 2021 IRIS acquired Dataplan, adding an education-specific element to their payroll service. Be mindful of the different options from a single vendor and ensure you are choosing the right one for your school, academy or MAT.

The pros and cons of different payroll software options for schools, academies and MATs

Thinking about the pros and cons of different payroll options is a key part of your decision. Considering several factors from the start can help you in the long run.

An Education-specific provider

We’ve mentioned before that education payroll can be complex. Particularly when you include teacher pensions, different contracts and a MAT spread across multiple local authorities. You may also have different pay dates and PAYEs across your schools. Selecting a provider who is well-versed in these sorts of requirements can make your life a lot easier. On the flip-side, limiting your search to education-specific can mean that many good providers are instantly out of the running. A happy medium between the two could be a larger organisation with an education arm.

Support

Support services are crucial for any supplier relationship but specifically for academy, MAT and school payroll software. If there are any payroll issues, you want to know that you can contact someone and get the answer and resolution as quickly as possible. Often the easiest way to do this is by speaking to someone or via email. You might also want to think about a dedicated person or team who knows your organisation and your setup so you can cut to the chase when you contact them. Make sure you look at the support and training options available as part of your relationship and choose the options that suit your school, academy or trust.

Costs

The cost of payroll software is often the key factor in your decision-making process. If something is out of your budget then it simply isn’t an option for you. Within the cost bracket though you want to think about the entire piece, not just the cost per person/payslip per month. For example, are there setup fees? Are the setup fees upfront or can you spread them across your contract term? Is the cost of the parallel run(s) included in that price? Are there any minimum processing fees? Do the costs cover all your support requirements?

Integration

Ensuring your payroll solution integrates with your other software can be a huge timesaver. Ideally, you want seamless integration with you HR solution (if you have one) and the payroll costs to be automatically reflected in your financial planning/budgeting software.

Security & accuracy

It goes without saying that payroll software and services need to be accurate and secure. It may seem like it’s a given but as part of the process you will want to check that the security features (including data encryption, password protection, and role-based access controls to ensure data confidentiality and integrity) are adequate and that the accuracy rate of your chosen provider is high enough to give you and your staff the confidence you need.

Scalability

With academisation on the rise, you want to know that your payroll solution is scalable to meet the needs of your school or MAT as it grows. Look out for things like the ability to easily add new schools with different pay dates and PAYEs.

How to compare payroll software costs and features for schools and MATs

Once you have a list of chosen providers, you then need to think about what’s most important to you. As we’ve mentioned, costs are a key factor but there are a number of other elements (as mentioned above) that need consideration too. It’s worth drawing up a tick box list to compare your options and see where each one features in different areas and overall. You can then prioritise the elements that are most important and that should give you your shortlist.

Tips for choosing payroll software that fits your school or MAT budget

Choosing a new payroll provider can be a daunting task, particularly if your existing service has been in place for a long time. Thinking about certain things can help to ensure you select the right provider.

• Identify your budget – understanding how much you are able and willing to spend will help you to narrow down your options and choose a provider that is within your budget.
• Understand your payroll needs – consider the size of your school, academy or MAT and the complexities involved in your payroll processes. Some providers may be more suitable for smaller organisations, while others may be better suited to larger organisations with more complex and education-specific needs.
• Research different payroll options – look for solutions that fit your budget and meet your payroll needs. Read reviews, compare features, and talk to other schools, academies or MATs to gain insight into a payroll provider in action.
• Consider scalability – are you a growing MAT looking to bring on additional academies over the next few years? You want to ensure your payroll provider grows with you.
• Consider the customer support – when you have a payroll query, you want to know that you can get an answer promptly. Think about whether you’d benefit from online, phone or email support (or a combination) when choosing your payroll provider.

Setting your budget for payroll software as a school or MAT

As we’ve mentioned, payroll isn’t something you want to get wrong so it’s worth investing the time, money and effort to get the right provider. That said, you are likely to have a budget that you need to stick to. There are a number of things to think about, including

• How much you are paying for your payroll now (monthly, one-off and ongoing costs)
• How much you are able to pay for your payroll costs over the next 2-5 years
  • Think about your overall (anticipated) costs and what you can afford
• The ‘market price’ for payroll software/services. It might be that you have paid a low price in recent years and moving (out of choice or necessity) could lead to a natural increase or decrease in price.
• Time savings that can impact your bottom line. We all know that ‘admin’ can take up a significant amount of time, particularly when it comes to an individual’s time. If you can free up some of that time you may be able to re-purpose staff which could have a direct impact on your bottom line

Understanding the different pricing models for payroll software

Understanding the different pricing models can help you make an informed decision about which payroll software solution is the best fit for your school, academy or MAT.

Per employee per month

With this pricing model, you pay a monthly fee for each employee. This pricing model is ideal for small businesses or organisations with a limited number of employees and is typically the most common form of payroll service.

Flat fee per month

Here you are charged a flat monthly fee, regardless of the number of employees in your organisation. This pricing model is often the best option for larger organisations or those with a high volume of payroll processing. It can prove challenging for organisations with complex requirements though.

Pay-as-you-go

Useful for businesses or organisations with fluctuating payrolls or those with seasonal employees, you only pay for the services you use.

Annual subscription

This involves paying an annual fee for using the payroll software. It can be a good option for organisations who want to budget for payroll software costs upfront and avoid monthly billing.

Per payroll run

This pricing model charges you a fee each time you run a payroll. It's ideal for small businesses or organisations that process payroll infrequently.

One-time fee

This isn’t a widely utilised solution but it can be ideal for organisations with an in-house payroll team that want to avoid recurring fees. You pay a one-time fee for the payroll software, and you own it forever.

How to evaluate payroll software features and functionality for your school or MAT

Once you have identified the key factors and features that are important to you, you can create a matrix to compare the different payroll options available in the market. To do this you might want to start talking to different vendors to make sure that the assumptions you have made are correct. Reputation is a key factor so it’s worth conducting your own industry research to understand their reputation in the market. This could include shout-outs on social media and asking on forums. Your peers in local or similar schools, academies or trusts can also give you an impartial view.

Once you have your short-list, you’re then in a position to request demos (if that’s an option) or speak to the experts delivering the service.

Maximizing your payroll software investment for schools and MATs

With staff costs the single biggest element of your budget, you want to ensure you are effectively prioritising your payroll requirements but also getting the most from your budget. From ensuring you have buy-in internally to negotiating the right price and everything in between, there are a number of things you can do to protect your payroll investment.

Strategies for getting the most out of your payroll software

Work with your vendor

By working with your vendor, you can understand key dates, key features and utilise their experience to understand how you can streamline your payroll processes. Unless your provider is very new to the space, you are unlikely to be the first school, academy or MAT they have worked with. While all organisations and setups are different, you can benefit from their experience and potentially avoid any mistakes that others have made.

Integration & automation

Integration and automation is key to reducing the admin burden. Utilising all the automation features on offer can save time and reduce the risk of errors. Likewise, integrating your payroll software or service with other systems, such as budgeting or HR management software, can streamline your processes and avoid manual data entry.

Utilise support & training

Once you have chosen your provider, you then have the opportunity to focus on how and when you are setup. As part of this process, take advantage of any training on offer to make sure you use the solution efficiently and effectively to help reduce errors and increase the accuracy of your payroll. In addition to training, take advantage of the support on offer. In the early days it is expected that you might need some additional handholding. If you have a question, rather than spending hours trying to find the answer yourself, it might be quicker and easier to ask your vendor’s customer support team for assistance.

How to use payroll software to streamline HR processes and improve efficiency

As well as the automation and integration elements we have mentioned above, there are other things that can help to streamline your processes, improve efficiencies and free up your HR team’s time to focus on more strategic tasks.

Utilise employee self-service

Giving your staff the ability to access their payslips and update personal information directly removes the need for your HR staff to do it. It also gives your staff autonomy and can help with buy-in to make them feel invested.

Generate reports

You can often generate reports on payroll expenses, employee hours, and other key metrics which can be used to make informed decisions and identify key areas for improvement. It’s also worth thinking about payroll reports from other (integrated) systems. For example, your budgeting solution might be able to provide you with a breakdown of your payroll costs – comparing different contracts, teaching vs non-teaching staff and your total supply staff bill for example.

Ensure compliance

Navigating the complexities of labour laws, tax requirements and other legal contractual obligations can be overwhelming. Payroll vendors have dedicated teams who are constantly monitoring any changes and new requirements and assessing the impact on their customers. Being able to pass this responsibility over can be refreshing.

Tips for training staff on payroll software and encouraging user adoption

• Involve staff early on in the project – the earlier you can involve you staff the better. Try to get a promoter who can encourage and influence your staff
• Make sure your training plan includes all relevant users and is timely for your go-live date
• Have a user adoption target – by giving yourself a target you naturally bring more focus and assign weight to a project
• Encourage feedback – ensure you have an easy, accessible feedback loop for your teams
• Make it easy for staff – selecting software and services that are easy to use will naturally increase uptake

Cost-saving measures for payroll software for schools and MATs

With budgets tight for schools, academies and MATs, cost-savings are increasingly important.

How to negotiate with payroll software vendors for better pricing

Do your research and prioritise your requirements

Before entering into negotiations, research different payroll software vendors and compare their pricing and features. This will give you an idea of what to expect in terms of pricing and which features are available. In addition, knowing your most and least important requirements will give you an idea of what to focus on when negotiating.

Request multiple quotes

Requesting quotes from several different payroll software vendors will give you an idea of the different pricing options available and how much room there is for negotiation.

Be open about your budget

If the initial costs you receive from vendors don’t quite meet your budget there may be some natural wriggle room. If you are open about your budget your vendor may be able to work with you.

Consider bundling services

You shouldn’t be afraid to ask for a discount and if your payroll provider offers multiple products, you might be able to negotiate for volume purchases. You could also think about signing up for a longer-term contract or requesting to change the payment instalments.

Work with your vendor

Most vendors will look at the longer term and what that means for their organisation. By highlighting your school, academy or trust’s strengths (size, networks, growth potential etc), you could show what makes you an attractive customer to the vendor. Some larger organisations might have a customer advocacy programme that you could be part of in exchange for a reduced rate.

Negotiate the contract terms

Don't just focus on the price. Negotiate the contract terms, such as the length of the contract, the level of support offered, and any updates or additional services that could be beneficial.

Cost-saving tips for implementing payroll software in schools and MATs

Implementing payroll software in schools, academies and MATs can provide many benefits, including streamlining payroll processes, reducing errors, and saving time. But, it can also be costly. Here are some cost-saving tips for implementing payroll software in schools and MATs.

Conduct a needs assessment

Before selecting a payroll solution, conduct a needs assessment to determine what features and functionality you need. This will help you to avoid paying for features you don't need and ensure that the software meets your requirements.

Consider cloud-based solutions

Cloud-based payroll software solutions can be more cost-effective than on-premise solutions, as they don't require expensive hardware and IT infrastructure. They also typically offer subscription-based pricing models, which can be more affordable for schools, academies and MATs.

Compare and negotiate pricing

Research different payroll software vendors and compare their pricing models. Look for vendors that offer transparent pricing and don't charge hidden fees. As we’ve mentioned, don't be afraid to negotiate with payroll software vendors and ask for discounts or price matching if you find a lower price elsewhere.

Leverage existing software

If you already have budgeting, accounting or HR software, find out if it integrates with your payroll service. Integrating existing software can save time and money.

Think about training needs

Investing in training for your staff can help you to avoid costly errors and ensure that you are using the payroll software or service effectively. There might be ways to reduce your training costs though if they’re not already included. Think about group training sessions or remote sessions to save on T&E.

Plan for scalability

As a MAT you’d be right in thinking that your trust might grow in the coming years. Choose a payroll solution that can scale with you. This will help you to avoid having to switch to a new solution in the future, which can be costly.

How can our software help

Access Education Payroll is designed for schools, academies and trusts. We offer a choice of a managed or in-house payroll service. Our managed (or outsourced) service means that we take on the responsibility of running and delivering your payroll. This is our most commonly selected option and we process more than 50,000 education pay slips every month for schools and trusts across the UK.

For those who have a dedicated, certified payroll person or team in place across their school or trust, we have an in-house payroll option which allows you to manage your payroll centrally, giving you more control and responsibility over your payroll and pensions.

There are pros and cons to both options. If you’re undecided and want to find out more about your options, take a look at our Payroll guide.

As standard, we cover all your payroll requirements from sending BACS, producing electronic pay slips, meeting RTI obligations, managing your pension processing and much more. We have a 99.9% accuracy rating and a 100% pass mark from the Chartered Institute of Payroll Professionals’ Payroll Assurance Scheme, so your payroll needs couldn’t be in safer hands.

Your dedicated Access Education payroll executive will be on hand to deal with any queries and we offer a monthly telephone service review as standard. At Access we also have a fully integrated HR solution (Access Education People) which can work alongside your payroll service. Our HR solution is also integrated with our Finance and Budget solutions, thereby streamlining your processes and saving you time and money.

The Access Education Payroll costs

At Access our costs are split into one off (implementation) fees and annual (subscription fees). Our one-off fees cover all your implementation and support needs plus two parallel pay runs which is required to ensure a smooth transition (inc data migration) from your existing provider. The cost for this depends on your requirements and a number of factors but we would be happy to discuss this with you.

Our annual fees operate on the basis of a price per employee per month and will depend on the number of employees you have in your school or MAT, but will typically start from around £3 per employee per month.