Faster Payments Survey 2022

The Faster Payments Survey 2022 was conducted by Income Group, Moorepay and CIPP (Chartered Institute of Payroll Professionals) and ran for six weeks, receiving responses from over 300 payroll professionals.

A blend of big and small businesses were asked about their current payroll payment process, including use of Faster Payments, how any payment errors are corrected plus the cost attached to amending these payment errors.

Industry leaders from Income Group, Moorepay and the CIPP analysed the results and delivered their key findings in a webinar, which can be viewed here:

The results

Processing payroll payments

Payroll is responsible for a wide range of payments within a business, including paying third parties, handling expenses, processing PAYE employee loans and advances.

  • 85% of these payments are done via BACS.
  • 3 out of 5 professionals use Faster Payments in some capacity. This can be paying suppliers, making one-off payments, but most of payroll is still done via BACS.
  • 57% of payroll professionals attribute not using Faster Payments to a lack of visibility in the market – they just don’t know Faster Payments can be used for payroll.

BACS deadlines

One of the most restrictive elements of BACS is the deadlines associated with making payments, and the three-day wait for it to reach recipients.

  • Almost half of those spoken to made more than 6 payments outside of the BACS pay run. This includes expenses, and if any expenses are paid by mistake, either a write-off or another costly BACS recall will be necessary.
  • Less than a third recover 91% -100% of overpayments – the majority write it off; an unnecessary additional cost to the business.
  • 1 in 5 had to make more than 20 payments outside of their normal pay run – all of these additional payments could be made through Faster Payments with no additional fees.

The main issue with companies not switching to Faster Payments for their payroll is lack of visibility, you can find out more about how Faster Payments compare to BACS and CHAPS in our blog: BACS, CHAPS & Faster Payments: A Guide – Income Group

  • Almost three quarters of respondents confirm employees have been overpaid as a result of late data. Due to BACS deadlines, data fed in late has led to overpayment as a result. One main example of this is ‘late leavers’.
  • Almost half confirm chargeable BACS recall has been required to correct the errors in pay run.
  • One-in-three submit payment on their BACS deadline day.

What does this mean?

  • Payrollers need extra time to reduce the volume of overpayments – Faster Payments reduce many restrictive barriers.
  • Errors incur costly BACS charges -e.g BACS recalls or time-consuming processes with employees to claw back overpaid funds.
  • Deadlines are tight; almost 30% of respondents submit payments 3 or more days before the deadline day. This means six-days of ‘wasted time’ to ensure payroll is finalised but creates the opportunity for late data to come in but no flexibility to alter the outgoing payments.

Correcting payment errors

How

  • The majority use Faster Payments, usually to correct payment errors, but using Faster Payments in the first place would significantly reduce the amount of erroneous payroll payments.
  • 41% of respondents use the slowest payment method, BACS.
  • 22% continue to use the most expensive payment method, CHAPS to make time-sensitive payments.

    Payments made outside of regular pay run each month

Who

  • 10% of providers take on these additional costs themselves. So, any errors made by a payroll bureau have financial implications which directly affect their bottom line.
  • 43% pass on the cost unless the bureau/provider was at fault.

Cost

Those who identified using CHAPS to correct payment on average:

  • Made 127 costly CHAPS payments per year
  • This was an average of £11.42 per payment
  • This means an additional £1450.34 cost as a direct result of payroll inaccuracy every year.
Proportion of overpayments to leavers eventually recovered

Why use Faster Payments?

Our CEO Ian Wheeler offered insight on Faster Payments in payroll, and explained that the need for more time is probably the critical item uncovered by the survey.

“Faster Payments are submitted during the early hours of payday, like BACS, however prior to that the data is able to be amended right up until the last second. This means any additions to the data or errors can be corrected the afternoon before the payment is processed.”

“Most payroll teams would welcome more time and flexibility with open arms, but there is a misunderstanding around the cost of Faster Payments when compared a BACS transaction. Income Group are able to provide a Faster Payment for the equivalent of a BACS payment, in fact in most cases the Faster Payment actually works out cheaper.”

Improved cashflow

Improve your cashflow flexibility by up to 2 days and reduce your cash flow risk.

Greater flexibility

Have up to 2 days longer to make payroll changes, and still meet pay day.

Reduce costs

Avoid short term loans, interest fees and costly emergency payment charges.

Survey results webinar

If you missed the webinar, or would like a refresher, please watch here:

Earned Wage Access vs Early Wage Access | What is the difference?

Earned Wage Access vs Early Wage Access | What’s the difference?

Employees are constantly striving for financial stability which is why the concept of Earned Wage ...
Read More →
5 tips to help grow your business

5 Tips to Help Grow Your Business

Building and growing a business requires strategic planning and resources. Businesses can work towards a ...
Read More →
How to fund Earned Wage Access

How to Fund Earned Wage Access

As businesses strive to enhance their offerings and attract top talent, innovative solutions such as ...
Read More →

See how much you can save by using EWA

Click/tap to load our interactive calculator and find out your cost saving in seconds!