Salary Costs Are Rising—Here’s How Smart Firms Are Fighting Back

You must have faced a surge of questions from your clients, who are business owners, on how to minimise their salary costs multiple times. The answer to these questions is that it can’t be avoided due to multiple factors, ranging from inflationary pressures, talent shortages, and changing workforce expectations. These factors have not only increased salary costs in the UK but also brought a sense of unpredictability in payroll.

These days, clients expect their accounting firms to offer more than just payroll services, like strategic advice on controlling salary costs and guiding them through difficult economic uncertainties. In this blog, we will show you how to control rising salary costs for your clients and be in their good books. Let’s get started.

Why Are Salary Costs Climbing?

It is not a mystery why salary costs in the UK are climbing up, and there are a set of factors. Some of these factors can be controlled, while some are out of your hands. However, we are highlighting the factors so that you can get a better idea of what’s causing salary cost rises. Also, by highlighting these factors, you will be better positioned to suggest or work out solutions to minimise their impact on your clients.

Here are some factors that are driving salaries up:

Inflation and Cost of Living Adjustments

The cost-of-living crisis in the UK is still impacting people hard, and this situation has pressurised businesses to keep their employees happy by offering raises in salaries and more benefits. These increases in salaries have helped combat inflation and retain staff, but they have also increased payroll costs.

Talent Shortages in Key Roles

Another major challenge that your clients are facing is a talent shortage in the UK market. This has led to an increase in competition among enterprises in attracting the best talent. Also, capable talent is demanding a good package, which has led to skyrocketing salaries. All this has led to a rise in salary costs.

Hybrid Work and Benefits Expansion

We have already discussed how businesses are trying to attract good talent by offering them higher packages. However, retaining these talented individuals requires separate arrangements, which include wellness budgets, remote setup allowances, and more. Also, transparency in their benefits expansion must be communicated and implemented, contributing to higher salary costs.

Increase in Minimum Wages

Your clients are expected to maintain full compliance with the UK’s National Minimum Wage and National Living Wage, which increased again in April 2025. Thus, this will impact every business across the board.

How Smart Accounting Firms Are Responding?

Are your clients frequently demanding cost-cutting solutions related to salaries? The good news is that you are not the only accounting practice in this situation. However, a few accounting firms have taken the initiative to be proactive and use this challenge to convert into something positive and long-lasting solutions.

Here’s how forward-thinking accounting firms are helping clients reduce salary pressures—without sacrificing productivity or employee satisfaction:

Outsourcing Non-Core Tasks

Proactive accounting practices have been utilising the option of accounting outsourcing services to the fullest. By outsourcing non-core tasks such as finance, HR, and admin functions to trusted partners, you will be in a better position to drastically reduce overheads for your clients.

Start with bookkeeping, accounts payable, and payroll outsourcing. By doing that, you will free up your in-house team from time and resource-consuming tasks and focus on client relations. Also, your clients will get access to faster, human-error-free accounting services.

Advising on Payroll Optimisation

Payroll is turning out to be a very resource-intensive and costly affair for many businesses in the market, and they have placed their faith in your firm for payroll optimisation. Many firms have achieved that by conducting a thorough audit of the payroll and have uncovered some interesting inefficiencies.

• Auditing has uncovered multiple overlapping responsibilities and unused roles.
• It has also led to identifying bonus structures that are not linked to performance.
• Over-dependence on expensive freelancers or temporary workers.

These inefficiencies, and many more, can be resolved through cost-effective restructuring, flexible staffing models, and incentive-based pay.

Leveraging Automation and AI

Digital tools have become essential pieces of equipment in bringing efficiency, accuracy, and productivity to the workings of accounting practice. However, proactive accounting practices have also identified these tools as a perfect weapon to reduce manpower requirements for their clients in certain crucial aspects.

Through digital tools, manpower requirements can be brought down in:

• Invoicing and billing
• Expense processing
• Reporting and reconciliation

The best payroll software always promotes automation, thus reducing the headcounts and saving payroll costs for your clients. Understandably, buying and training staff on these digital tools is a considerable investment. However, you can access these tools without buying them through accounting outsourcing services.

Emphasising Flexible Employment Models

Many accounting practices have become trusted financial advisors for their clients due to their cost-saving advice, such as encouraging hybrid and part-time work arrangements. These advices have helped lower their salary costs and also encouraged them to expand their talent pool.

As advisors, you can push your clients to prepare cost-effective contracts that:

• Balance hours with project needs
• Reduce benefit liabilities
• Maintain team engagement

Implementing Tax-Efficient Payroll Strategies

Smart accounting practices have also discovered several HMRC-compliant ways to lower their client’s employer liabilities. These ways are:

• Salary sacrifice schemes for pensions or electric vehicles
• Reviewing NICs structures and allowances
• Ensuring tax-free benefits are utilised

Frequently Asked Questions (FAQ) 

Conclusion

It’s a given that you cannot stop salary costs from rising due to multiple factors, but with smart planning, its blow can be softened. The best you can do for your clients is give them strategic directions, which will slow down their salary costs. Promoting automation, streamlining processes, and outsourcing non-core accounting tasks can save your clients from cost escalations and lay the foundations for long-term advisory relationships.

Achieving automation and streamlining processes in-house can be a tall ask for your team, but you can achieve these targets in a single shot through accounting outsourcing. Many accounting firms have placed their trust in Corient and have reaped dividends from it, and it’s time for you to do the same. Our tech-savvy and automated accounting outsourcing services have increased productivity, reduced errors, enhanced efficiency, and helped practices cut payroll costs for their clients. Share your requirements or queries on our website contact form and our executive will contact you. We are confident we can achieve the same result for you.

All the best and looking forward for a long-term association.