The upcoming increase in employer National Insurance (NI) contributions is set to impact many businesses, directly increasing payroll costs. As payroll is often one of the largest business expenses, this change has the potential to strain cash flow, disrupt hiring plans and create administrative challenges. Without proper preparation, businesses risk missed payments, penalties or difficult staffing decisions.
The cash flow challenge for growing businesses
Many businesses find payroll to be one of their most time-consuming and stressful tasks. Ahead of April 2025, we know that this pressure will only increase. Here’s why:
- Rising NI contributions will directly increase monthly payroll outgoings from April 2025 adding £615 per employee with a salary over £9,100.
- Increased payroll costs put pressure on your cash flow, potentially disrupting investment plans or working capital.
- There’s also a compliance element – managing payroll in line with new NI rates adds an extra layer of administrative complexity.
3 ways to manage payroll costs and cash flow effectively
To help fast-growth businesses stay ahead, we’ve identified three key solutions that address common pain points like saving time, improving accuracy and reducing risk through expert support and technology.
1. Integrate payroll into cash flow forecasting
Real-time forecasting is critical for fast-growth business, enabling them to act quickly on growth opportunities. It allows them to forecast the financial impact of expansion and adjust their growth strategies proactively.
With payroll being one of your largest costs, integrating it into your cash flow planning is essential. Through the use of tools like Futrli, you can:
- Plan ahead for NI increases and see how they affect your monthly cash flow.
- Run ‘what-if’ scenarios to model the impact of salary increases, new hires or cost reductions.
- Identify cash gaps and spot potential shortfalls early so that they can be addressed proactively.
2. Control payroll-related costs with automation
Automation scales with your business, supporting rapid growth without adding administrative overhead. It allows you to manage increasing complexity efficiently, keeping costs under control while ensuring accuracy and compliance.
In addition to payroll, related costs like expenses and overtime can strain cash flow. There are a number of automation tools available to manage these costs more effectively:
- Gain a better view of your team member’s expenses by automating expense tracking with tools like Dext, fully integrated with payroll.
- Use digital timesheets to monitor the overtime of your team before it affects payroll, enabling you to be proactive rather than reactive.
- Streamline pension contributions and other benefits into your payroll process using clever employee benefits tools.
3. Outsource your payroll
Managing payroll in-house can become a costly distraction. By outsourcing your payroll, you reduce administrative pressure, ensure compliance and gain better visibility over one of your largest business expenses. You can learn more about Harold Sharp’s Payroll Team here.
Some of the benefits of outsourcing your payroll include:
- Keeping your administrative payroll costs to a minimum.
- Ensuring that your payroll runs smoothly without taking up undue management time.
- Leaving you with the peace of mind require to focus on running your business.
How can we help?
With employer NI increases on the horizon, now is the time to ensure your payroll and cash flow processes are efficient and resilient. From selecting the right tools to providing expert guidance, we’ll help you build the financial clarity and resilience you need to run your business smarter.
Contact James Turner on the below or complete our Contact Form for help with driving automation in your business.
James Turner
Accountant | Fast growth
0161 905 1616
jt@haroldsharp.co.uk