Payroll Software and People Management blog

Outsourcing payroll processing to an external provider still remains a very popular method among businesses of ensuring this critical function is completed effectively. As a result, there is currently a multitude of payroll outsourcing organisations available, each with their own strengths and weaknesses.

Choosing the right provider for your business is an important process and many find that a thorough examination of your short-listed payroll outsourcing bureaus pays dividends in the long run. To help you during this stage, we have composed 5 questions below that should be asked to all candidates to ensure there are no hidden surprises once your choice has been made.

Do you charge for every payroll change made?

An organisation’s workforce is constantly changing, from adding new employees, to changing salaries, contact details and bank accounts of current staff, to terminations. One of the consequences of this reality is the subsequent alterations that need to be made to the payroll to reflect these changes.

Bearing in mind the amount of modifications that could accumulate during the space of one pay period, discovering how each payroll outsourcing service charges for these adjustments often proves to be a prudent decision. This is especially true for those organisations with a higher number of employees, which obviously results in more changes being necessary from week to week.

What reporting options do you offer?

Every business is different and accordingly each has its own unique set of requirements. This also applies to payroll reporting, where all organisations have their own individual needs, typically including both standard reports plus more advanced, personalised versions.

It is important that you clearly understand how each payroll outsourcing provider structures their report offerings and what options are available to you. Knowing exactly which reports are included with your monthly fee and also what others are available along with their cost will help you to discover whether your company’s reporting requirements will be met cost-effectively or not.

Are there penalties for cancelling the agreement?

Unfortunately businesses can sometimes make the wrong decision and find themselves with payroll outsourcing providers that aren’t meeting their needs. The problem can also be compounded by the company being locked into a long-term contract with heavy penalties for early termination.

To avoid the possibility of falling into this situation, it is always a prudent course of action to ask all prospective payroll outsourcing providers what the terms of their service agreements are. Enquiries should also be made about whether there are any break costs if you decide to end your association with the provider earlier than expected.

Finding an outsourcing organisation that provides flexible terms has many benefits. Not only does it obviously empower your company with the freedom to change your payroll outsourcing service whenever you like, it also ensures that your bureau will work harder to retain your business.

What are your disaster recovery capabilities?

Will your payroll data be protected in the event of a disaster? It is imperative for all businesses to ensure their employees continue to be paid no matter what adverse events the future brings.

Finding out what resources and business continuity plans a payroll outsourcing provider has in place should a disaster occur provides you with the knowledge that your business is safeguarded in the future, putting your mind at ease. It can also prove useful to learn what your responsibilities are in the disaster recovery process, allowing you to be completely prepared if the time comes.

What are the response times to customer enquiries?

One of the most important aspects of the relationship between a company and the bureau that processes its payroll is how enquiries are handled. No matter which outsourcing provider you choose, enquiries relating to your payroll will inevitably arise that you will need answered in a prompt fashion. 

Discovering how these queries will be dealt with and defining a clear understanding of service levels and response times with a provider will help to ensure that you aren’t left in the dark wondering what is happening with your enquiries.  It can also be a wise decision to find out exactly who will be responsible for fielding questions relating to your payroll. Is it the actual person processing your payroll or is a call centre approach used to field all questions? Many businesses often prefer a more personalised approach so identifying this can have a large bearing on their final decision.

In 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.