When is it a good idea to outsource your payroll function? When it is a non-core function of your company. A non-core function is not a profit-making function, though it may be necessary for your business. In most businesses, administrative activities such as the payroll function are non-core functions and as such, have the potential to be outsourced. But the question you may want to be answered is: what do you gain from outsourcing your payroll function? Do the benefits of outsourcing outweigh the effort of running your payroll internally? The short answer is yes! Ideally, outsourcing your payroll provides you with;
Time for Core Functions
Payroll is one of those activities that may not directly increase your bottom line but poorly carried out; it can put your business in a negative position. One of the significant payroll challenges is simply the amount of time it takes to process as it can sap internal time and attention away from core functions that make you money. Outsourcing your payroll function to a reliable provider not only results in a better payroll process but also reduces the time spent on payroll so that you can focus on your core business.
Access to Expertise
Another reason to outsource your payroll function to a provider is to get access to expertise in payroll. An experienced payroll provider maintains payroll teams that keep abreast of all regulations. Dedicated payroll specialists stay up to date on all changes in deadlines and tax requirements that could affect payroll, ensuring company compliance. Outsourcing to a payroll provider can assure you that your tax obligations and payroll requirements will be taken care of accurately and on time.
Access to Technology
Just as essential as access to expertise is access to technology. Employers are now relying on technology to operate more efficiently – including the payroll function. As a company grows, there are more employee records, more need for reporting, etc. This is when a lack of technology becomes a hindrance to scaling your business for growth. Employees expect technology; they want options such as self-service access to their payroll information. The explosion of mobile device usage is also ushering in a new level of technology expectation; employees also are using mobile apps for things such as payslips. With mobile usage continuing to grow, employers that can’t provide such options may be at a competitive disadvantage.
When considering outsourcing an activity to any provider, cost-cutting is generally the main reason why. Outsourcing your payroll function to a payroll provider reduces the costs of hiring, training, and maintaining an in-house payroll administration team. A payroll service provider has a team of payroll professionals who are thoroughly trained and qualified. A reliable payroll provider will also provide you with a fixed, transparent fee structure that helps with your annual budgeting.
Payroll is a complicated and potentially risky business function as there is an ever-present risk of data security breaches. How secure is your payroll data on the current server or network? With GDPR compliance requirements, this is an essential consideration for all companies. By contrast, payroll service providers offer a “haven” for your confidential payroll data. Also, a quality payroll provider invests in processes and systems for storing and protecting data, simply because it is part of the service provided to clients.
So, when is it a good idea to outsource your payroll function? We believe now is the correct answer.