Outsourced payroll is a popular business practice that many companies are turning to. It has been around for decades, but it seems that more businesses are starting to outsource their payroll to third-party providers in order to save time and money.
Outsourcing your payroll can be advantageous for your company if you have the right information. But there are also a number of major disadvantages to fully outsourcing your payroll. Here are some of the basics of outsourced payroll so you can decide if it's right for your business!
So, what is outsourced payroll & how does it work?
It may sound pretty self-explanatory but it isn't always clear what will be included when outsourcing your payroll...
In a nutshell, outsourced payroll is a practice in which businesses outsource their reporting, salary payments, and other forms of remuneration to a third-party provider.
This is typically done to save time or reduce compliance risks.
However, the scope of what's included in these services will typically vary across different providers and you should always check with the service provider first.
The cost of outsourcing your payroll will usually depend on the number of employees in your organisation as well as the exact tasks you want to outsource.
The benefits of outsourcing your payroll
It goes without saying, the benefits of outsourcing your payroll are numerous. Here are just a handful of reasons companies may choose to outsource their payroll:
1. You can avoid common mistakes in calculating wages
2. You can decrease payroll compliance risks by not having to perform calculations yourself
3. For some companies, outsourcing payroll ends up costing less than running it in-house
4. It allows you to focus time and energy on other aspects of your company
5. Depending on your current payroll processes it could save a LOT of time and headache
The disadvantages of outsourcing your payroll
Whilst outsourcing your payroll can have a lot of benefits, there are a few disadvantages to be aware of.
One major downside for companies is giving up control over sensitive company data or confidential information.
Outsourcing payroll typically also involves a lot of upfront work and legwork in order to get everything set up, which can be pricey and time-consuming for some employers. You may also find varying levels of service between providers which can lead to delays in issues being resolved and consequently disgruntled employees.
For a large company with a lot of employees, it can also be an expensive process to outsource the entire process.
On the other hand, for very small companies, the cost of outsourcing may actually outweigh the time you save compared to just running it in-house.
The middle-ground between in-house payroll vs fully outsourcing
The good news is, there is a third option!
At PayCaptain we've taken a hybrid approach to help companies outsource their payroll.
Our cloud-based software and world-class support team allow you to handle as much or as little of the Payroll process as you want to.
Giving you the ability to simply improve and streamline your existing in-house processes, fully automate and outsource your payroll function, OR anything in between.
Because our software is cloud-based, you also never have to worry about buying the latest version of the software or long, arduous update processes. Any updates or new compliance features are instantly available through our secure cloud servers. We also use bank-level security features meaning your data is always safe and compliant.
Is outsourced payroll right for you?
- Do you have a dedicated staff member who does nothing but manual payroll right now?
- Is your business growing so rapidly that you do not have enough time to devote to doing it yourself?
- Will outsourcing the task of managing payroll save you money or more time?
- Is compliance becoming difficult to keep on top of or manage?
- Are you regularly receiving complaints from employees about late or incorrect pay?
- Are you currently using legacy software that is out of date or difficult to integrate with other business or HR systems?
If you answered "yes" to several of the above questions, outsourcing your payroll is something that could probably provide you huge benefits.
If you'd like an approach that allows you full flexibility over how and what you manage with your payroll process, be sure to book a demo of PayCaptain today.