If you’ve been running payroll in-house up until now, why is it time to change? Here, we explore nine benefits of outsourcing your payroll.
- Save time; boost productivity
It really doesn’t matter how many people you employ, processing payroll in-house is a drain on every business, whether you have a team of 20 or a workforce of 2,000. Every week/month, you’ll be paying people to juggle timesheets, tax and NI deductions, SSP, SMP, pensions, benefits, onboarding, departures, retirements and more – and it never, ever stops.
“But if I outsource payroll, I’ll just be paying someone else the same amount to do the same job elsewhere,” you might think. But in reality, it doesn’t quite work that way. Outsource payroll and you hand the job to people who have just one role and just one area of expertise. In-house, payroll is often one of many jobs your HR/accounts/payroll team may have to manage. And because they’re spinning lots of plates, payroll can’t be done as swiftly or as efficiently.
Outsource, and payroll becomes more efficient – and so do the people within your business who used to process it.
- Cut costs
The cost of your payroll isn’t just in the staff wages of the people who process it. To calculate the true cost of running payroll in house, total the following:
- Payroll staff wages
- Payroll software licences
- Payslip supply, print & distribution
- Fines for non-compliance
Compare that with the cost of outsourcing (we look at how much outsourcing payroll costs here) and you’ll be in for a very pleasant surprise.
- Simplicity and control
Even with the cost and efficiency benefits, we talk to lots of people who believe that direct control of the payroll by keeping it in-house or handing everything over to the bookkeeper or accountant, is worth sacrificing a little efficiency.
Yet it’s a flawed presumption. You don’t lose any control from outsourcing payroll – and there’s no simpler way of doing it. It’s a different process, for sure, but it’s one that’s very easy to adopt.
And the biggest recommendation? Often, the clients who come to us have been sent our way by their accountants who know the benefits of outsourcing payroll all too well.
Outsourcing means that, whatever the size of your business, you can tap into real expertise. From how to manage parental leave to pensions auto-enrolment to tax or NI queries, there’s always someone who has the knowledge to solve your problems quickly. Which means your in-house staff don’t have to spend an age finding the answers.
- Avoid mistakes and penalties
It’s fair to say that HMRC has a lot of ways to penalise businesses that make errors with their tax arrangements. In 2018, almost 250,000 companies failed to meet their filing deadline, attracting penalties as a result. And that’s before we get to fines for errors in the return itself for which fines run on a sliding scale based on gravity and level of negligence/innocence.
The issue of errors is a major one, and it’s compounded by the fact that very few businesses that run payroll in-house employ specialists who do payroll and nothing else. There are usually many other duties involved, and that’s where increased opportunities for error creep in – either in a simple but avoidable keying error or in missing a deadline.
Outsourcing payroll reduces errors. It should completely eradicate non-compliance errors. And whilst no provider can guarantee 100% processing accuracy, they should indemnify you against mistakes, so if there’s ever a problem, they pay the cost.
- Boost security
The way businesses store data has been under the spotlight like never before recently. In house, that responsibility is yours.
That’s an onerous burden even with the latest system boasting state of the art security, but few businesses have that quality of kit or the in-house expertise to keep software updated and compliant.
For an outsourced payroll company, security is as fundamental an element as accuracy. And they carry the responsibility for ensuring it stays that way.
- Avoid tech upgrade costs
Payroll software is a significant expense. That’s even more the case when legislation changes, forcing you to upgrade or switch services. And when there’s a problem with the system, who do you have in-house with the skills to solve it?
When you outsource your payroll, the software – and the licences, updates and maintenance for it – stops being a problem.
- HR management as part of the package
Outsource your payroll, and it’s not just the payroll that becomes more efficient. Add in the HR management tool, and you can make everything from leave planning to performance management easier.
HR management tools take the pain out of HR processes. Reviews aren’t missed. Essential accreditations and certifications don’t lapse. And leave planning is far more transparent thanks to a system that anyone can access, and which prompts actions to ensure essential HR tasks don’t fall between the cracks.
- Business continuity
In every business that processes payroll in-house there’s usually one person who holds the keys to payroll knowledge. The fact that so much of a business’ ability to function sits with one person may not be a problem when things are running smoothly. But when they’re away unexpectedly, things can quickly fall apart.
Consider this: if the person in charge of your payroll were to fall ill tomorrow or walk out of the door, would your ability to process the payroll go with them?
When you outsource payroll, you don’t hand it to a single person. Whilst there will be an account manager with prime responsibility for your business, there are many others who could and will step in to ensure nothing gets missed in an emergency.
Outsourcing payroll isn’t simply a matter of cost – although the costs stack up in its favour. It’s a matter of security, accuracy, compliance, business continuity and more.
To explore the difference it could make to your business, talk to us now.