Technology cures for umbrella sector

Umbrella companies increasingly rely on technology to improve and manage their transactions but ever-more robust systems are needed to combat cybercriminals and protect businesses

It has been a challenging 12 months for the umbrella sector. Several companies fell victim to the activities of cybercriminals, and it was hit by a widespread cloning attack. It’s no surprise that the umbrella market is a target for such attacks given the large volumes of financial transactions that take place within it every day. Moreover, the reliance on technology across business has widened the attack platform for every organisation in every industry – in the private, public and third sectors – and all are increasingly vulnerable.

Just as technology is at the root of the problem then so, too, is it at the base of the cure. And this doesn’t just mean ensuring vigorous cybersecurity practices are in place – though this needs to be top of the agenda – but using the latest technology to put robust systems and processes in place to look after all aspects of the business and its operations. Indeed, in common with other sectors, umbrella companies’ health and prosperity rely on understanding how to extract maximum value from technology to increase efficiency, win new business and service clients.

“Technology continues to improve to provide the sector with more efficient tools to manage their businesses, and it’ll be increasingly important to umbrella service providers that their systems are capable of scaling to handle increased volumes in a compliant and extremely secure fashion,” says Chris Bryce, CEO of Freelancer & Contractor Services Association (FCSA).

Putting in place a carefully considered digital transformation strategy that ensures the company is both future-fit and future-focused is imperative but isn’t without challenge. Companies in the sector service a complex supply chain and many are still reliant on legacy systems and even manual processes. But they must be mindful that expectations of the use of technology by agencies and contractors in this chain have raised in line with consumer experiences, as it has in all sectors. They will expect to see the use of mobile apps, portals and real-time data. Crucially, digital infrastructures need to be able to offer agility and the ability to scale up and down to meet the needs of the business in good and bad times.

For this reason, Bryce believes it’s likely that cloud-based, software-as-a-service (SaaS) platforms are needed to largely replace on-premise or bespoke systems. “I also believe that the systems in the market at the moment, which still largely provide just payroll processing, will further develop to cater for the entire vertical chain,” he says. “Each participant – end-user, employment business, umbrella and worker – will be able to use different views on the same platform for their specific needs ranging from managing open positions to candidate ID and Right-to-Work checking to candidate management, reconciliations and, of course, payroll processing.”

Without doubt, umbrella companies’ systems must tick a lot of boxes, but the good news is the latest generation of cloud-based solutions – offering portals, mobile access and other tools – are facilitating the above scenario, enabling umbrellas to take this holistic view when planning for the future. Such cloud-based systems include the likes of Primo Umbrella, which integrates its payment and billing platform with a customer relationship management (CRM) system to run the entire business; Codapay, which makes use of artificial intelligence (AI) and a raft of time-saving technology; and My Digital, which recently launched its My Digital Sync facility that seeks to eliminate the majority of manual processes between recruitment agencies and their payroll partners.

Clarke Bowles, chief revenue officer at My Digital, explains that this recent development ensures data-processing and day-to-day operations are always synchronised across partnering organisations. “Consequently, many of the slow processes became streamlined making the journey from worker onboarding to getting them paid faster and free from manual errors,” he says. “This directly benefits the service that our clients’ contractors receive.”

While umbrella companies should routinely review processes, especially when implementing new technology, it is also fair for them to expect flexibility from technology providers given the complexities that exist in the sector that include the different approaches to paying contractors and adapting to changing legislation.

“There can be a dilemma for technology companies because do they present something fixed such as an umbrella module or a set of tools that can be set up in different ways to suit how people are being taxed,” says Daniel Clark, founder of Umbrella Systems, which offers a cloud-based approach. “We don’t say – and we never have – ‘here’s an umbrella module, a CIS module or a gross-to-net module’. We’ve basically got a system that says, ‘the supply chain consists of companies, contractors and agencies’ and it has sufficient flexibility to fit in with how the client works and how they are taxing people.”

My Digital reports that among the most popular features of its solution is its net wages reconciliation tool, that allows umbrella companies to reconcile the net wages paid to their workers with the corresponding statutory deductions ensuring compliance, and its integrated instant payments feature. The latter enables them to pay their workers quickly and easily without the need to export payment details from the system and then logging into their bank. “They can conveniently do the payments through My Digital. This saves time and money, and makes running an umbrella company much easier,” says Bowles.

He adds that, generally, umbrella companies are receptive to developments that significantly improve their day-to-day operations, create a better visibility of how the business is performing and deliver a better experience for the contractors they are serving: “We have found that the adoption rates of things like business intelligence reporting or instant payments have been high.”

Key questions to ask technology providers

  • What level of security do you offer – for instance, do you have Cyber Essentials certification by the National Cyber Security Centre and do you plan to further build on this?
  • What ongoing support do you provide and is it 24/7?
  • How will your technology allow me to better manage the relationship with contractors, agencies and others in the supply chain? For instance, will they have visibility of information relevant to them via portals or mobile apps?
  • How can you demonstrate that your system will help us remain compliant?
  • How easily can I integrate with business intelligence and reporting and analytics systems – or does it have this functionality built-in? Does it allow me to gain real-time insights into operations?
  • What is your technology roadmap for the future?

Indeed, ease of integration with business intelligence, reporting and analytics, CRM and other tools should figure high on any umbrella’s technology wishlist. Umbrella and construction industry scheme (CIS) payroll provider Liquid Friday says it benefits from the power of big data courtesy of its Salesforce CRM system, which has been blended with its payroll system (see Case study, below). Meanwhile, My Digital’s People Hub is effectively a built-in CRM and has a business intelligence tool powered by Amazon Web Services Quicksight that provides real-time insights into payroll data helping to make informed decisions and optimise operations.

Given the backdrop of events over the past 12 months, there is no getting away from the subject of security and, as difficult as ransomware, malware and other cyberattacks are to guard against, umbrellas can’t absolve themselves of responsibility for them. They need to put worst-case/disaster recovery plans in place and ensure their house is in order when it comes to robust password management protocols and governance. They must also ensure they know where their data is being stored and the security levels that guard it. Many software providers will have Cyber Essentials certification by the National Cyber Security Centre but some go a step further.

Clark has been astonished over the years by what people “don’t ask” in terms of security and due diligence. “They hope someone else is asking the questions or sorting the problem and this is what has got some organisations into trouble,” he says.

“Our solution is slightly different in that we own our own cloud. We have a government-accredited server farm with fibre lines going into the cloud,” adds Clark. “So umbrellas effectively rent the software and they rent part of the cloud. They can access it through their desktop or the web, but it is an underlying application on a secure platform.”

As Liquid Friday shows in developing its own app to encourage communication in the supply chain (see case study), umbrellas are also themselves innovating. Orca Payroll Group is another example of being at the innovation frontline, having pioneered the real-time compliance platform The Apex, which provides agencies and businesses time-stamped records from HMRC as well as providing a full transparent audit trail each time a payroll is processed. It’s now going a step further and through partnerships with SafeRec and Payslip Buddy, all contractor payments will be subjected to weekly independent audits to ensure they are being paid compliantly and correctly, and they get a full audit of their payslips for the lifetime of their employment with Orca Pay Group.

Orca CEO Rob Sharp welcomes such tools, and also notes that we’re seeing a shift in thinking from agencies. “They know there is technology out there in the marketplace that can bring more transparency and highlight nefarious activities, which could potentially put them in the firing line,” he says. “The umbrella industry is truly entering the era of forensic auditing.”

Case Study

Liquid Friday, established in 2006, is an REC business partner and an FCSA-accredited provider of umbrella and construction industry scheme (CIS) payroll. Joe Taffurelli, head of group operations and a member of the senior leadership team, said the organisation has always invested heavily in deploying technology that ensures it supports its mission to deliver the best service for clients and contractors.

“We have achieved this by deploying Salesforce as our primary customer relationship management (CRM) system, giving us the power of big data with the flexibility of complete customisation of both system and process,” he says. “We utilise the reporting suite to ensure we have access to any data that may be needed to help improve our clients’ and contractors’ experience.”

It has blended this with the Merit payroll system, ensuring it can provide payroll services from a recognised expert payroll software house. 

The Salesforce system and its level of customisation and automation has meant that Liquid Friday has been able to rapidly scale the organisation without the need for substantial investment in manpower. “This has proved extremely valuable in a candidate shortage.

In addition, we have used our data, automation and in-depth knowledge of our contractors to help our agency partners with filling vacancies,” explains Taffurelli, who oversees strategy and provision of services across the group and has more than 10 years’ experience at the heart of the umbrella industry.

Liquid Pay is currently building its own app, designed to keep in contact with its contractors, and encourage communication through the supply chain. “Uniquely, we will be helping our recruitment agencies more than ever with filling vacancies and matching our fantastic contractors with exciting opportunities,” he says. He adds that Liquid Friday has never stood still with technology and as well as investing in the app, is always looking to improve the CRM and assist with the development of partner software such as Merit. “We recognise that the future is going to be even more ‘ever connected’ and want to be ready to serve our contractors and agencies whenever, wherever they need us.”

And he concludes: “Technology is an important, if not vital, part of the equation. However, it is the people, knowledge, empathy and care that our team provide that is the secret to our success. Technology is being developed to complement those skills and attributes, not to replace them with an app or just another portal.”

Image credit | iStock

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