Things to consider when outsourcing Payroll
With the introduction last year of Real Time Information (RTI) and the up and coming Auto Enrolment Pension changes many companies are considering outsourcing their payroll.
The following are 10 things for a business to consider when deciding whether the benefits of using managed payroll services will work for them:
1 Cost of outsourcing vs an in-house payroll team
Big businesses can afford to maintain big payroll departments. For smaller businesses, however, an in-house payroll service is a money burner. If your business has fewer than 20 employees, there’s a very good chance that you can save money by outsourcing your payroll operation.
It is then a simple question of doing the maths. Work out how many hours your employees are devoting to payroll-related activities, calculate how much you’re spending and compare the amount to the services offered by several payroll service companies.
Also, be sure to factor in the money your business spends on tasks like printing and distributing reports, creating payslips etc. You’ll probably be surprised by the result.
2 Productivity of your business
Payroll management is a time-consuming activity. With this burden removed, your employees can focus on doing more productive things for your business. You may even be able to reduce your overall staff numbers resulting in even further cost savings.
3 Accuracy of employee payroll
Payroll mistakes can be painful, angering employees and putting your business at risk of fines from HRMC. A good payroll provider is far less likely to make a serious error than your in-house staff, particularly those who only undertake payroll activities as part of their role and are being pulled by different priorities.
Additionally, if a big mistake is made, you have the comfort of being able to seek financial restitution from the paryoll provider — something you can’t do with your own employees.
4 Reliability of salary payments
In-house payroll activities are as reliable as the people doing the work and can be impacted by unexpected staff absense or during holiday periods. Using an outsourced payroll service will ensure the activity continues regardless as they will have contingencies in place to cover these events.
You also won’t have to spend time training new employees in the event of a change in personnel.
5 Speed of payroll processing
As outsourced payroll providers are specialists they have the technical resources at their disposal to ensure that even the most complex payrolls are processed quickly and efficiently.
Unlike most employers, they can also accommodate a temporary influx of seasonal workers without the need to upgrade systems that won’t be fully utilised during the rest of the year.
6 Technical and Industry Knowledge
The recent legislative changes have highlighted the need for anyone processing payroll to keep up to date with industry and regulation changes and have the level of knowledge to understand how they impact on a business.
This is an added burden for a member of your business to undertake (particularly if payroll is not the main part of their role). A quality payroll company will keep up to date with payroll related legislation changes for you and in the case of a company such as Qtac will actually be challenging the practical implementation on behalf of its clients.
7 Accountability if things go wrong
In the unlikely event of payroll being delayed or incorrect it is the responsibility of the payroll company to fix things quickly and efficiently.
If they can’t (or won’t) remedy the situation to your satisfaction, then legal redress is available. You ultimately have the ability to switch to a new provider quickly and easilty.
Replacing an underperforming employee is a considerably more difficult and time consuming process.
8 Flexibility to use staff skills where they can be more beneficial
Some elements of payroll work can be very repetitive and not necessarily utilise your employees skills in the best way you can. There are also regular deadlines that have to be met regardless of other activity going on within the business.
Outsourcing these tasks to a specialist payroll provider will free up your employee to focus on other areas within the business that better suit their skill set and at a time that suits you, which in the long run will have significant benefits for the business.
9 Security and integrity of payroll processes and data
The sensitive nature of the data held to run payroll and the potential for fraudulent activity mean that as an employer you need to ensure you have tight controls and systems in place to ensure the security and integrity of the entire payroll process.
An outsourced payroll company will utilise secure technology to ensure that sensitive data is not misplaced or compromised. They will also have controls in place to monitor activity and being 1 step removed from the company will provide additional protection against fraudulent behaviour.
10 Peace of mind
The final consideration when looking at whether a managed payroll service is the right option for your business is the peace of mind that it can bring to a business owner or manager. No headaches or hassles leaving them free to focus on running a profitable business.
If you would like to discuss your payroll requirements in detail and in particular whether an outsourced solution would work for your business contact our payroll team on 0117 9353500.