Against widespread belief, payroll outsourcing is not a practice reserved for big multinational corporations alone. Quite the contrary, even micro-enterprises have grown accustomed to outsourcing their payroll to their Certified Accountants, who in turn also outsource this task more and more to other specialized service providers. The only entities still reluctant to adopting this solution are the SMEs. Payroll outsourcing presents however an interesting set of advantages. Concisely, it produces accurate paychecks, delivered on time, completely safely and cost effectively. Expanding on this idea, we put together a list of 10 good reasons advocating for payroll outsourcing:
1) Simplicity – easy access to a secure payroll interface
In-house payroll implies a payroll processing software, staff training, updates and data backups. By choosing to outsource payroll, you benefit from working with a user-friendly payroll interface, easily accessible at any time, which does not require any software or hardware installation. Most importantly, your data is safely hosted on secure servers.
2) Reliability – payroll managers = rare and expensive workforce
A good payroll manager is a scarce resource. Depending on your area, it can be very difficult to recruit and retain competent people for this function. Outsourcing payroll allows to delegate these constraints to your service provider.
3) Availability – safeguarding the payroll processes
Assigning one person in charge of payroll internally puts the entire company in a vulnerable situation, should this person get sick or decide to leave the company. Outsourcing payroll to a team of external specialists guarantees the benefit of dedicated assistance and monitoring at all times.
4) Reactivity – social declarations filed in due time
Computing and editing pay-slips are not the only activities undertaken by the payroll service. This department is also in charge of issuing and transmitting social declarations towards the concerned welfare agencies on a regular basis. These procedures are time-consuming and may require going back and forth with the administration to ensure the conformity of the documents. Moreover, late submissions result in considerable penalties. You can prevent all this by also outsourcing the declarative process.
5) Professionalism – accurate pay-slips prepared by payroll experts
Payroll is a very complex process in almost every country, with Brazil and France ranking highest in the world from this point of view. In France for example, this fact is backed by the multitude of lines on any given pay-slip, continuously changing tax rates or consistent updates when it comes to national collective agreements. By outsourcing, you entrust your payroll process to dedicated experts, whose experience guarantees a correct interpretation and implementation of new regulations.
6) Compliance – strictly following the legal framework
Monitoring the law – a necessity when it comes to payroll – can prove to be tedious and expensive. Payroll managers, their qualified staff and other payroll specialists exist therefore to ensure for you a permanent monitoring of all legal and conventional developments. The documents produced by specialized payroll companies are always in compliance with the applicable law.
7) Profitability – generate savings & focus on core business processes
The cost of a single pay-slip goes far beyond the cost of the human labor it takes to produce it (more specifically, the wage of the payroll manager divided by the number of processed pay-slips). We must also take into consideration chunky investments such as the price of the chosen IT solution, or recurrent costs associated with recruitment and training of specialized personnel, providing backup in case of absence or any other possibly incurring financial penalties. It is not uncommon that, taking into account all these factors, outsourcing payroll allows savings of 20 to 30%. This is possible due to economies of scale achieved by the external payroll service provider, who functions as a true “payroll factory”.
8) Efficiency – refocusing on value-added HR
For the HR department, payroll is a boring, complicated and at times even a risky task. It distracts them from their core business, which is human capital management. By outsourcing payroll, HR specialists free up time to devote to recruitment planning, interviews and training, to develop a coherent HR strategy and help the company assign the most competent employee to every available position, at any given time and within the best possible framework.
9) Privacy – neutralizing payroll-related sensitive aspects
The fact that an internal payroll manager knows the exact salaries of all his colleagues may prove to be delicate matter, especially in small and medium-sized companies. It can even happen that a payroll manager’s personal ethics conflicts with the company’s strategy or code of conduct. After all, we are talking about very sensitive matters at the discretion of one person – a potentially serious vulnerability for the company. Outsourcing payroll reduces this unease and all related risks, external payroll managers having no interest in your business.
10) Minimizing costs – variability reduced to number of employees
Most payroll providers establish their prices according to the number of pay-slips to be issued, which allows for a straight-forward, simple vision of the real cost. Thanks to outsourced payroll, you achieve a better control of your yearly budget, since random costs related to staff training, necessary equipment or payroll software renewal are taken completely out of the equation.