Payroll Software and People Management blog

6 reasons why outsourcing your payroll could save you time and money.

Posted by Sage MicrOpay on Wed, Feb 06, 2013 @ 11:39 AM

Payroll OutsourcingIn today’s competitive business environment, companies are continually searching for cost-effective ways to streamline their processes and become more efficient. This trend extends to the payroll function, where there are many different options available to ensure this critical part of every business is completed effectively. Whilst numerous organisations prefer to process their payroll on-premise with their own computer infrastructure and software, many businesses find that choosing to outsource their payroll is the most prudent course of action. Why is this so? The following explains the many benefits of having your payroll processed by an external party and why this option could be the most beneficial for your organisation too.

Complex IT infrastructure not required

Payroll software solutions can often be large complex programs, frequently connecting to multiple databases and accessed by numerous simultaneous users. One of the pre-requisites to effectively implement and operate these programs on your premises is the presence of the appropriate IT infrastructure including hardware, software and networking capabilities. Additionally these systems also need to be upgraded and maintained over time to ensure they fulfil the requirements of the latest software updates.

Businesses that prefer to outsource their payroll function do not need to possess their own payroll software solution. As a result, these organisations can avoid the significant costs involved with maintaining a complex IT infrastructure for their payroll systems.   

No need for dedicated payroll staff

One of the major advantages of electing to outsource your company’s payroll processing is the resulting reduction in the need to employ specialist payroll staff. The process of recruiting, employing and retaining highly trained payroll professionals to complete your payroll obligations on-site is often a time-consuming and expensive ongoing operation. Careful consideration must be applied to ensure that applicants with the appropriate skills and experience are firstly identified, attracted and successfully hired.

Outsourcing your payroll to an external organisation negates the need for capital outlay on recruitment processes and labour costs, representing a large financial saving.

Remain compliant

One of the most important duties for any business that processes its own payroll is the job of keeping up with the latest payroll legislation to ensure they remain safe and compliant. Unfortunately, Australia’s extremely complex taxation system means completing this exercise successfully can often be a challenge.

By outsourcing your payroll to a professional bureau, the risk of non-compliance is transferred, meaning you no longer have to constantly ensure your payroll processes abide by the current regulations. Organisations that specialise in processing payroll for external parties are also much better equipped to ensure continued compliance by employing experienced payroll professionals and implementing the latest software updates to their software systems.

Access to data recovery and backup measures

Having constant access to your payroll data is critical to the continued success of your business. The implementation of disaster recovery and backup measures to keep your data safe should something unforeseen happen to your premises is another cost that all businesses must face if they choose to process their payroll in-house.

Due to the large amount of sensitive information they handle every day, payroll outsourcing operations have extensive data recovery and backup contingency plans in place in the event of disaster. This means that your payroll data is conveniently protected as a part of the outsourcing service you choose, giving you peace of mind that your employee information is safe.

No large capital outlay

The purchase and implementation of the requisite IT infrastructure plus the appropriate payroll software solution to process your payroll in-house often involves large upfront costs. For businesses with tight cash flows, this capital outlay can represent quite a large obstacle.

Organisations are able to avoid this situation by taking advantage of the monthly payment options and low implementation fees that numerous payroll outsourcing bureaus offer. Plans can also be tailored depending upon your needs such as the amount of reporting, or the number of data changes needed each pay period meaning you only pay for the services you require.

No training costs

Organisations that employ full-time payroll professionals to process their payroll on-premise enjoy many benefits including direct access to their payroll data and the ability to immediately produce any required reports. A drawback of this approach however is the need to ensure that these employees are properly trained in the latest payroll software solutions as well as current government regulations.

Businesses that rely on a payroll outsourcing service to process their payroll do not need to employ full-time specialists or arrange regular training sessions. Instead this duty is left to outsourcing providers, resulting in these companies avoiding a number of training costs.

Topics: payroll, outsourcing