Outsourcing Payroll service to an external service provider to handle the finance and payroll operations of the client company is slowly becoming the norm. It has been proven to save a lot of expenses and valuable time leading to lesser hassles. Payroll process is not only about writing pay cheques or calculating withholdings. It consists of a whole gamut of responsibilities in addition to the basic processes.
Payroll processing is a time consuming and cumbersome process that can bog down business owners and prevent them from focusing on the more important aspects of the company. Whether or not to outsource payroll is one of the most important decisions that the management needs to take. However before deciding on whether to outsource payroll processing, do look out for the advantages and disadvantages of outsourcing:
Manual payroll processing takes up enormous amount of time and efforts. Thus outsourcing payroll to a service provide can free up staff time that enables them to pursue more important value-added and revenue-generating activities.
Large organisations do not have a problem in maintaining big payroll departments. However, for smaller companies maintaining an in-house payroll department can burn a lot of cash. By outsourcing your payroll operations, business owners can save that money. Identify the number of hours employees devote to payroll processing and calculate how much you’re spending. Then compare the amount to the prices offered by other payroll service providers. Most find that outsourcing suits their growth.
Security and confidentiality:
Having a strict control over sensitive information is important for every organisation irrespective of their size. If payroll information is going to be shared with the outsourcing company, then rest assured as these companies take utmost care to maintain complete confidentiality so that there is no compromise. To be safe, do evaluate the outsourcing company carefully. And make sure all information is protected and the contract has a penalty clause if any problem occurs.
Paying only for relevant services
Many payroll companies offer packages that are all-inclusive packages and also that can be customised as per the client’s needs. This helps in controlling the cost of outsourcing payroll, and it’s possible to include additional services that are beneficial to the business. Determine what you need from a payroll company before seeking a service provider can help in making a relevant decision.
Maintaining consistent quality
Another benefit of outsourcing to an external agency is the consistency in the quality of work provided. Salaries are always processed of the right amount; including correct computation of taxes according to the relevant tax slabs. These service providers have a comprehensive checklist for these payroll outsourcing companies to make sure that quality of work never varies.
Thus the decisions to outsource should be approached through proper consideration of the potential benefits in relation to the organizational impact that will come with the decision to outsource. The management needs to set detailed guidelines about which task these third party providers would need to do and also a checklist for these service providers to follow. It will help them maintain control over their cost and efforts as well as focus on being more productive.