Every business is different from the next, in terms of size, goals, and needs. But payroll is something that every business needs to manage, and outsourcing payroll can prove to be extremely beneficial.
You see it all the time – in-house payroll teams trying to cross the “T’s” and cross the “I’s” throughout the business calendar, especially at the end of the fiscal year, due to the risk of accidental non-compliance.
This situation plays out in companies of all workforce sizes and industries. An immense amount of internal resources devoted to payroll almost around the clock – all while juggling other company priorities.
These days, you hardly see companies trying to solve their IT problems themselves, as outsourcing this expertise to IT help desks have become commonplace. So why spend time troubleshooting that complex server error message on your monitor and risk having all your data deleted?
Just as companies outsource IT solutions, why not outsource internal payroll to a payroll outsourcing service so the company can focus on its core business?
Payroll functions that can be outsourced
Imagine how much time and risk could be saved if functions like the following were handled by payroll outsourcing:
– Processing superannuation
– Reports and payroll
– Scheduling and time tracking
– Monthly regulatory filings
– End-of-fiscal-year processing
– Interpretation of bonuses
– Keep up to date with the latest payroll changes, such as payroll taxes
For companies that have previously handled their payroll in-house, it’s easy to question the value of outsourcing payroll when they’ve been handling it themselves since day one.
But there are some valuable benefits of payroll outsourcing for companies to consider:
They suffer direct and indirect financial losses
1. you have the cost of funding in-house payroll.
If you choose to handle your payroll in-house, you will obviously incur costs for an in-house payroll team. This practice is very expensive because you must pay all associated wages and benefits to employ the team, not to mention other hidden employment costs, such as retention and recruitment costs. If your company is relatively small in size, chances are the cost of employing this team will be significantly higher than the cost of using an outsourced payroll service on an as-needed basis.
2. you need to purchase and upgrade expensive software/technology.
One thing we can all agree on is that payroll software is not cheap. If you choose to run your payroll in-house, you will need to purchase and upgrade the latest software for all your payroll needs. Such programs may include “benefits management” software, “time and attendance” management, and other services such as automated payroll mailing. In contrast, those who choose payroll outsourcing have the privilege of the simple periodic payment. This means that their entire payroll is taken care of with this one payment.
3.They have the cost of providing training.
Having an in-house payroll team comes with the cost of providing effective training. To stay compliant, you need to make sure your payroll staff is up to date on the law and any policy changes. Providing this training is time-consuming and costly. Those who choose outsourced payroll get access to payroll experts without the worry or financial burden of conducting the latest training.
4. you can incur serious penalties and costs.
If you choose to do your own payroll, you run the risk of paying a penalty for making a mistake. Think of the risk of accidentally omitting information, making a late tax deposit, or misclassifying an employee’s worker type. These are just a few of the most common mistakes that can result in hefty penalties. If you choose to outsource your payroll, you’ll never run the risk of suffering these financial consequences.
5. you are likely to overpay your employees.
The discrepancies between employee time and accurate timekeeping can mean that you’re overpaying your employees. The average amount companies overpay their employees is 4%. Outsourcing your payroll is an effective way to keep a more accurate attendance record.
Not sure how much your company would spend on in-house payroll? Use an online calculator to get a clearer picture.
You don’t have industry experts to ensure compliance
Payroll mistakes are all too common and all too easy to make. For example, you may assume that the overtime rate is 1.5 times the employee’s hourly rate, but that’s not always the case. These unintentional mistakes can get your company in hot water. In contrast, those who choose to use payroll professionals have the peace of mind that the experts are always up to date on such things as payroll tax changes. Those who opt for payroll outsourcing ensure constant compliance.
Your security is at risk
Choosing to handle payroll yourself in the office poses a significant security risk to the entire company. Some of the risks include identity theft, misuse of profits, and intrusion into your business records. Keeping your data localized in the office is always a risk that you depend on security software to protect, which must also be provided at your expense. Another benefit of outsourcing is that the protection of your data is handled by the payroll provider. This eliminates the risk and hassle of protecting it in the office.
You waste valuable time
Completing your own payroll is very time-consuming and requires tedious re-verification of data every pay period. This process eats up time that could be better invested in your business. Any alternative that allows you to reclaim that time should be considered extremely worthwhile. Payroll outsourcing is so valuable because it allows you to reclaim that time instead of spending it on administrative tasks.
The knowledge behind your payroll can migrate away
It’s inevitable that one day your team members will decide to leave your company. When they do, they will take their invaluable payroll knowledge with them. No matter how thorough a role transition is, the reality is that this process will happen again and again as employees move on. Instead of worrying about a knowledge gap, an external team could take over your payroll.
The benefits of outsourcing payroll functions for businesses are hard to overlook. Whether it’s a small, medium or large business, it’s a great initiative for a company to consider.
Whether or not your company needs to outsource payroll depends on many individual factors, and you should carefully analyze all of the data before deciding to hire a professional or handle payroll in-house. Always be careful before hiring a payroll company. They will be handling a very important part of your business, so a high level of professionalism and customer service is very important. Finding and hiring a good payroll provider will save you and your employees a lot of time and even money, allowing you to focus on more important areas of your business.
This wide range of benefits has convinced thousands of companies to switch to an outsourced payroll solution.
Why you should hire Finex Outsourcing with your payroll management service.
Finex Outsourcing is one such company that specializes in payroll services in payroll services, among other things. We are a major player in this industry with years of experience. The lessons we have learned over the years put us in a strategic position to handle your payroll with ease and no-frills. We deliver quality service at a reasonable price.