Payroll Outsourcing – Putting Your Business First

11 August 2016

For many businesses, payroll outsourcing offers an attractive and valuable alternative to in-house processing. Choosing a payroll provider correctly offers a less expensive, simpler means of ensuring your employees, HRMC and NI are paid correctly on time, every time. However, choosing poorly your payroll process can result in a full-blown financially induced migraine!

Let's look first of all at why companies often make the decision to process payroll in-house:

  • They consider in-house processing to be the cheaper, more cost effective option
  • They are cautious about sharing salary information
  • They want to maintain control over payroll data and feel outsourcing means losing that control

In truth, many ultimately discover it’s not all that cheap – especially when factoring in the time spent managing the process. Without proper knowledge of the payroll process and access to the right payroll software, it’s easy to make mistakes - like not paying employees correctly or on time. The success or failure of any payroll system will ultimately be judged by your employees as well as the taxing authorities. The ability to address new legislative requirements is vital with the potential for non-compliance becoming an increasingly expensive risk for companies.

Choosing a provider

Along with the specific payroll services you need for your company, your chosen provider should offer a high level of customer service because, unlike some other business services, you will absolutely need to communicate regularly with them on a regular basis. Choose the right provider for your business and you'll probably start to feel the benefits pretty much within the first month or so. Things like:

  • Service levels agreed at the outset of any engagement allowing for thorough understanding of financial services support costs
  • Quality and value for money from a dedicated team ensuring peace of mind on staffing issues e.g. holidays, sickness, recruitment.
  • Access to proactive, accurate and timely financial information maintained by a dedicated resource to your business
  • Reduced investment required in IT and software to support your payroll function

Questions to ask

Whilst the first question you will want to ask any payroll provider is “how much will it cost me?” it is imperative that you are not purely driven by cost. Asking questions about the features of the services you're going to get will ensure you partner with the right provider; one who understands your business and has the capabilities to grow with your business. For example you'll want to know: 

  • What does your standard service include?
  • How quickly can you re-run a payroll if there is a mistake?
  • How long does the average client stay with you?

In conclusion, watch out for providers with low base-processing rates and expensive add-ons - and make sure there are no grey areas around exactly what you're getting - that means having a good SLA or contract in place. Partnering with a payroll provider who understands your business will ensure you and your management team have the time to concentrate on building your business while your admin team can direct their efforts toward more value-added activities.

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