Why is paying staff weekly a bad idea?

Weekly payroll used to be fairly common and is still popular in some trades. Why is it best to avoid it?

Written by Jen Nolan - Thu 12th Nov 2020

bookkeeping and business development services

Payrolls used to be run weekly, monthly or once a year and HMRC were only made aware of the figures at the tax year end.

Now HMRC insist on receiving a report every time an employer pays a member of staff.  Payroll calculations can not be 'rolled back' like they could before, because each time a business pays someone, there has to be an RTI submission to HMRC.

Weekly payrolls were always time consuming and expensive to process as you are fundamentally doing four times the work of a monthly (or 4 weekly) payroll run.  With all the pensions calculations and deductions lots of businesses need to pay for an outsourced service and having this weekly work carried out is not cost effective.

The other reason it would be best to avoid a weekly salary run is that most customers pay businesses on a 30 day credit term.  This means that often you are paying your wages out well before the customer has paid the business for the work.  If you can get the staff comfortable with a monthly payroll run you can shorten the gap between paying the team and getting paid by the customer.

It is not an easy transition to make (I remember personal experience of this from years ago), but with one bumpy month and perhaps an advance or two for those who will struggle the most, the change can be made.  So many of us pay our rent/mortgage and bills monthly now, the argument for weekly wages is a fairly weak one.

BW Bookkeeping and Project Solutions Ltd.

6 Keats Court,
Eaton Ford,
St Neots,
Cambridgeshire,
PE19 7LX

07825 152951

jen@bwbps.co.uk

Home Page FAQs Blog Facebook Instagram LinkedIn

Company Number 13495928
VAT No. 450467105
Registered in England and Wales - Registered Office: Staple House 5, Eleanors Cross, Dunstable, Bedfordshire, England, LU6 1SU

We recommend Dunstable accountancy practice
Spicer and Co

BW Bookkeeping logo

Quickbooks Advanced Certified Pro Adviser - Gold

Testimonials

Excellent bookkeeping service and knowledge of the work. We recommend this firm if you are looking for a bookkeeper,
Phil Bass, Dunstable

We have been a client of BW Bookkeeping since 2017 and rely on them for a range of services. They helped us change from a sole trader to a limited company and handle all our banking and VAT.
Mason Grab Hire Ltd, Aston Clinton

Outstanding! BWBPS sorted out my books then provided me with the support and training I needed to get everything up to date and back on track. Friendly, professional service which I would highly recommend.
Cake Company St Neots

Quickbooks Advanced Certified Pro Adviser