There are many benefits to payroll outsourcing that can save your business time and cost. This allows more time and resources to be channelled towards core business activities.
Businesses have options when it comes to deciding which aspects of payroll to keep in-house and which to outsource. For example, outsourcing can simply be adopting software that your in-house payroll team manages, or a function that a payroll vendor oversees completely.
However, as we know, outsourcing your payroll is a big decision that should not be taken lightly. A company that is not ready to outsource will not be able to take full advantage of the opportunity it presents.
How do you know if outsourcing is right for you?
Below is a checklist to consider before proceeding with outsourcing your payroll function.
1. Past Outsourcing
If you previously outsourced payroll or other functions, consider your experience implementing them. Are you prepared to support and champion the implementation of the new system? This might include in-house training of your payroll team in the use of the new software.
2. Overall HR Strategy
HR should add strategic value to the company. If your HR or finance department is bogged down by transactional tasks instead of core business activities, then they are not functioning optimally. Transactional HR tasks are high frequency, time-consuming, low strategic impact administrative tasks such as payroll. With the digital boom, administrative tasks like payroll can certainly be automated, relieving internal HR pressure so they can focus on delivering the highest return on investments for your business.
3. How Much to Outsource
While there are definite benefits to outsourcing your payroll function, an indiscriminate approach might not be the answer to optimising your outsourcing strategy. For instance, if your HR team handles rostering efficiently, signing up for the full suite of human resource information system (HRIS) features may not be cost efficient. A more tailored approach to outsourcing might suit your business better. Do you know exactly which aspect(s) of your payroll function need to be outsourced?
4. Do the Math
Before you sign on the dotted line, have you mapped internal costs? Do you have a clear picture of which areas you can save on by outsourcing? There are handy online tools that can help you tabulate your figures. Additionally, be sure to have a look at past attempts at simplifying your payroll processes and find out where you’ve succeeded and failed. Only outsource in areas where you know is necessary.
5. Experience You Can Trust
Who has the experience you can trust? A payroll system requires some initial effort to integrate into your business’ infrastructure, and is not something changeable on a whim. One of the most important aspects of the payroll function is keeping abreast of the latest payroll legislation. Calculations involving taxation and superannuation need to be error-free to ensure compliance and reduce risk. Ideally, your chosen payroll vendor would have past experience dealing with businesses similar to yours and has a grasp of your particular business needs.
6. Cultural Fit
Ultimately, you want a payroll vendor who is not just interested in taking your money, but nurturing a collaborative relationship with you based on mutual understanding. There is a multitude of payroll vendors out there. With a bit of research, you are bound to find one you can work with to foster growth.