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Irish Examiner
2nd July 2007

Payback time for payroll software firm

Set up four years ago, Kerry company Payback Payroll now has 3,000 customers in Ireland and is about to launch a new version of its payroll software in Britain, where it hopes to sign up 1,000 customers by the end of the year, writes TRISH DROMEY

Most payroll and accounting software is produced by huge multinationals, but a County Kerry start-up company is now carving out a niche for itself supplying payroll software to small and medium sized enterprises all around Ireland. Set up four years ago, Payback Payroll now has around 3,000 customers in Ireland and is about to launch a new version of its software on the British market.

John and Eamon Honan, who co-founded the company, are now hoping it will attract the attention of a multinational or a venture capital company. The company, which now has a staff of four, is an unlikely enterprise for the small village of Lixnaw. It started out in Dublin but the Honan brothers decided there were quite a few advantages to moving to a place with less traffic and lower overheads.

"Both of us have an IT background and in 1999 set up an IT consultancy business doing work for insurance companies and banks. We were approached by a bookkeeper who had a lot of small clients who couldn't outsource their payroll so we decided there would be a market for a payroll software product targeting SME's explains John. He says the idea of developing and licensing software seemed a more attractive option in terms of generating revenue than providing a consultancy service.

They set about devising a solution that would be easy to use for staff who don't have expertise in either software or accountancy. The project was financed by consulting work while the software was being developed. After six months it was ready for Beta testing and then for launch on the Internet. As a small company without resources to spend on conventional marketing and advertising, the most affordable way to attract customers was to use the web.

"We used Google advertising to ensure that when anyone typed in a search for payroll software our website came out on the top of the list,'' explains John. He says that the immediacy of the web was an added advantage and that within a few weeks the software had been downloaded by several hundred companies. Customers can try it for free for a short period and then they have to pay for a licence. "It costs €120 a year for a licence which is very good value for a complex piece of software which includes a support service," says John.

Having launched the software in 2004, the Honans relocated Payback Payroll to Lixnaw in August 2005. Because the company relied upon online sales it didn't need to be in Dublin any more. "We chose Kerry because of family ties, and because it seemed like a pleasant location, with cheaper office space and no traffic jams, which meant better productivity overall,'' adds John.

The move wasn’t as easy as planned though, because the company initially could not get broadband in Lixnaw and this was essential, given the nature of the business. The Honans eventually secured it and signed the company up to participate in the Enterprise Ireland-backed Genesis Enterprise Programme for start-up companies in 2006, going on to win the Genesis 'Market Entry Success' award in April 2007.

Payback Payroll has recently entered into a partnership with Norwegian company Mamut - supplying its Irish module of accountancy software. The company also supplies the Irish Payroll Association with software for its nationwide FAS computerised payroll training courses.

"We now have customers in every county in Ireland but the majority are in Cork, Dublin and Limerick; mostly SME's and they include quite a number of restaurants, creches and building companies," says John, who estimates that the customer number is doubling every year

Last year the company started developing its British version of Payback Payroll, which is now undergoing Beta testing with a limited number of companies and will be launched at the end of this month. There are 10 times more SME's in Britain than in Ireland and Payback Payroll is hoping to sign up 1,000 customers there by the end of the year. "Long term we are hoping the company will reach a point where it becomes attractive either as an investment for venture capital funding or as an acquisition by one of the large software payroll companies,'' says John.