Sage on the defensive following Xero payroll announcement

Calum Fuller for AccountancyAge.com writes: THE UK's largest business software company has hit back at a competitor's claims that there has been a 'lack of innovation' in payroll technology.

Sage, listed on the FTSE 100, has responded to claims from Xero managing director that there has been a dearth of fresh ideas in the payroll software market.

The clash comes after Xero announced the launch of its 'Payroll' software at its flagship conferenceXerocon 2015. The latest offering will allow small business owners and their employees to schedule time off and view payment information from any device at any time.

It will also submit real-time information to HM Revenue & Customs, with submissions automatically handled with each payroll, along with PAYE, student loan and national insurance calculations.

"We're bringing some fresh ideas and innovation to payroll, which hasn't really seen much interesting in the last ten or 15 years," Xero managing director Gary Turner (pictured) told Accountancy Age. "The problem is legislation changes so frequently that most payroll software companies can just about keep up with that. The prospect of anyone innovating in payroll in the last ten years has been pretty remote and so a lot of it today is quite tired and it feels like 2005. We're looking to do what we've done for bookkeeping for that sector."

But Turner's opposite number at Sage, Lee Perkins, issued a strident response in which he said the company is "immensely proud" of its record in "enabling hundreds of thousands of UK businesses get to grips with RTI and auto-enrolment".

"Payroll professionals have just been through an unprecedented time of change with the twin pressures of RTI and auto-enrolment," Perkins added. "Anyone who suggests that the payroll market has been marked by a lack of innovation simply doesn't get the pace or scale of what the industry has achieved in transforming payroll."

In 2013 Sage came under fire after a software issue saw 5,000 clients have end-of-year payroll submissions filed incorrectly. 

Alongside the payroll launch, Xero announced the addition of Metro Bank to its network of live bank feeds, alongside RBS, HSBC, Natwest and Silicon Valley Bank.

A partnership with European mobile payments provider iZettle, which will allow small business users to integrate their payments with their accounts in real-time.