What is the benefits of payroll outsourcing services?
Outsourcing your payroll to a third party provides a number of benefits to all kinds of businesses. Outsourcing puts your payroll in the hands of the experts, allowing you to focus better on your business, while taking advantage of technology and expertise you may not be able to afford in-house.
Payroll is one of those processes that is essential, but not critical to sales and business growth. This is why payroll can feel like a drain on work hours and resources – resources that could better spent in making money. Payroll is complex and payruns need to be made on a regular basis, so this function doesn’t just go away once it’s done. By outsourcing your payroll, you can alleviate those burdens and channel more of your time, energy and resources into your core business functions.
The cost savings of payroll outsourcing are proving highly beneficial. In the current economic climate, businesses are looking for more ways to keep costs down, improve their efficiency, and gain a competitive advantage.
Outsourcing your payroll also gives you access to payroll knowledge and processes that you don’t have internally. This means that you can rest assured that your payroll is securely and accurately taken care of every month. So as well as saving money on setting up payroll internally, you avoid costly payroll errors too.
Putting time back into your business operations
Performing payroll in-house is an administrative task that scales as your business grows and is not a business function that is directly tied to any profit centre. Processing payroll, ensuring compliance against Modern Awards, Timesheets and Pay Conditions along with handling employee queries and preparing reports are all functions of payroll that take time away from other business operations.
By outsourcing your payroll you not only free up administrative time for your staff but gain the additional benefit of having payroll services experts efficiently handling employee queries ensuring your staff are focused on business operations and not payroll.
Realising the cost benefits of engaging a payroll services company
Processing payroll in-house has a direct business cost attributed to the financing of a payroll team for payroll processing, maintaining payroll software and managing employee queries and pay conditions which can, in most cases, be greatly reduced by outsourcing to a payroll service provider.
Typically measured in a ‘per payslip’ cost, this can be simply calculated by adding up how many headcount hours are dedicated to payroll activities (processing payslips, maintaining software, managing queries), multiplying that by the salary cost and dividing by the number of payslips processed in any period.
Save Money
Outsourcing payroll is often an attractive alternative to performing this job in-house because it can help you save money. Taking care of payroll internally is not always the most cost-effective approach. First, you must invest in additional resources to get started, such as:
- Computer equipment
- Manual or electronic accounting programs
- Training to use the program correctly across your HR and finance departments
Additionally, employers must stay up to date on changes in tax rules, personnel, and accounting deadlines. Missing these important changes can be very costly and expose the business to additional liability.
Good times to outsource payroll are when your employees work varying amounts of hours, you have to pay payroll taxes for multiple regions, you are losing money by manual timekeeping, or you have a high turnover rate. In these situations, outsourcing payroll can save both time and money.
Enhance Security & Reduce Risks
Payroll processing is a complex and potentially risky business operation. Even with trusted employees, there is always a risk of identity theft or embezzlement of funds for personal gain. There’s also an ever-present risk when using in-house payroll software: How safe and secure is payroll data on the company’s server or network? This nagging question can consume a business owner’s energy and attention as well.
By contrast, payroll outsourcing providers offer a “safe haven” for your confidential payroll data. In addition to redundant backup and multiple server locations, a quality payroll provider invests in state-of-the-art systems for storing and protecting data, simply because it is part of the service provided to clients. Being able to ensure the privacy of your data therefore requires constant monitoring to ensure operational continuity and data protection.
Compliance with Government Regulations
With laws that govern provident fund to calculation of taxes, employee benefit programs and incentives provided to staffers, it becomes challenging for organizations to process the exact reimbursements and salary for each employee.
Better efficiency
Payroll outsourcing means sending your payroll off to be done by professionals. Typically speaking, this means that your payroll will be processed more efficiently and with fewer mistakes. Even at first glance, this ought to make sense – while your company’s payroll department is a larger part of a rather different business, the company to which you have outsourced your payroll concentrates only on payroll matters. This is a situation where outsourcing to experts really does help.
More hiring flexibility
Outsourcing payroll allows you a greater degree of flexibility in hiring new employees. Instead of having to continually staff your payroll department as your business gets larger, you can shift that part of your workforce over to the parts of your business that will actually make you money. This can be a perfect choice for those businesses that are in a growth cycle but who still can’t spare employees for those aspects of the business that are not considered part of their core competency. If you need to do the most with a limited number of employees, you need the flexibility that comes with outsourcing your payroll department.