Business consultants have advocated outsourcing of non-core functions to consultancies for long now. Accounting, human resource management, tax, payroll are some of the non-core functions that many organisations spend a lot of time and effort on. Non-core function is an activity that does not directly generate profit for the organisation. However important it might be, non-core functions do not differentiate your organisation from your competitors.
According to Deloitte, around 47% of organisations in Europe, Middle-east and Africa outsourced their payroll completely. Payroll outsourcing in UK is becoming popular, and a rise in the number of organisations seeking expert help has been noticed in the last few years.
Business owners and managers have always wondered why companies decide to outsource their payroll function. We have come up with top five benefits that an organisation may derive out of outsourcing payroll. Check them out!
Large businesses can definitely afford to maintain payroll departments in the organisation, but is it practical for small and medium-sized organisations to do it themselves? Think of the time that is spent in the following activities – calculating payroll in each period, keeping up with changes in tax rates, printing, signing and distributing paychecks, software maintenance, training and support, new hires, and many more.
One way to compare the cost of having an in-house department with the cost of outsourcing is to calculate the labour hours put in, in a month and multiply these with the wage rate. Now compare this with the cost of outsourcing it to payroll service providers, considering that they offer good plans. You will be surprised that the cost of outsourcing is quite less than getting it done in-house.
Expertise of professionals
A payroll service provider would have a team of experts who know payroll processing in and out. They are abreast with changing regulations, tax rates and government forms. They also act as a single point of contact for queries of employees and can handle complex issues which would otherwise consume a lot of time and energy of the in-house team members. This is because this what the professionals of payroll company are trained in. They also conduct regular training for their employees so that they are updated with new changes.
Helps focus on core business
When you outsource non-core functions like payroll, you can concentrate on your core functions, which are directly related with sales and profits of your organisation. Payroll does not directly affect your sales, but if carried out poorly, may hurt your business.
When it comes to employees, businesses have to comply with a lot of laws, from federal, state to local. It takes a considerable amount of time, man hours and attention to detail to deal with them. Often, business owners get caught in the loop and overlook some of these filings which results in default. Don’t you think it is wise for the business owner to focus on the core function and outsource payroll to service providers? It definitely is.
Just like it is important to get professional expertise, technology is important too. Even with the most trusted employees, there is a risk of embezzlement of funds, identity theft, or tampering with the records of personal details of employees. How much time and energy do businesses have for this?
Payroll service providers have advanced software and programs that store and protect data safely and have redundant backup and multiple server locations. They have systems in place to identify any kind of payroll fraud and alert the employees of the same.
Compliance with government regulations
Government rules and regulations are constantly changing and often you don’t come to know the changes till the time you have defaulted. Business owners can’t be expected to know these changes on time considering the number of responsibilities they already have on their shoulders. They are held responsible for any cases of misrepresentation or non-compliance. This can lead to audits and penalties, which is why it is best to outsource payroll and have peaceful nights.
These are some compelling reasons for businesses to start outsourcing their payroll function to service providers. Why do it yourself when you can get it done from experts at a lesser cost!