Organisations turn to an external payroll service provider to support their payroll functions for a variety of reasons – some may want to free up time spent on administrative tasks, some strive to maintain high accuracy of their payroll calculations, others may feel that it is more cost-efficient as opposed to hiring multiple headcounts to oversee and manage the payroll functions. Aside from these reasons, outsourcing payroll to an external service provider brings about a slew of cost and time benefits as well.
Benefits in engaging an outsourced payroll provider
Drive accuracy in payroll calculations
These payroll providers are likely to have deep experience in running payroll and are familiar with the end-to-end payroll processes. They are often viewed as payroll specialists and are aware of the various salary terminologies, statutory contributions and deductions, claims reimbursements etc. With this specialist knowledge, these external payroll providers are able to ensure high accuracy in payroll calculations. At the same time, they are likely to be equipped with robust payroll software systems to facilitate accuracy in payroll calculations, especially for large sets of payroll data.
Manages the complexity of ever-changing tax rates
Payroll calculations can be complex given the ever-changing payroll legislations and tax rates. The good thing about engaging an external payroll vendor is that they are typically on top of these legislative changes. This is particularly important especially when in-house HR is overseeing multiple countries or regions. An outsourced payroll partner can help organisations to manage these ongoing legislative changes while ensuring accurate payroll calculations.
Maintains timely salary disbursement to employees
Timely salary disbursements are critical for various reasons – increased employee satisfaction levels, facilitates cash flow management, and ensures timely tax reporting. An outsourced payroll partner helps to take away the hassle of organisations having to keep up with important payroll, salary disbursement and tax reporting deadlines, while juggling other operational workflows.
Finding the “right” outsourced payroll partner
There is no doubt plenty of payroll vendors in the market offering a plethora of payroll solutions. However, there is no such thing as a one-solution-fits-all. Every payroll partner has their own unique solutions and nuances. The question is – which is the “right” payroll partner to go with?
With the evolving technological changes, there are bound to be new payroll solutions and customised options that payroll vendors can offer. However, new does not necessarily translate to best. Here are some reasons why organisations need to be selective when deciding which outsourced payroll partner to go with.
A suite of payroll functions for organisations to choose from
An outsourced payroll provider should ideally be able to offer the end-to-end suite of payroll functionalities. While organisations do not necessarily have to take up all that the payroll provider is able to offer, a range of options provides some flexibility for organisations when they need to choose which payroll process they should outsource. For example, an organisation who originally outsourced one part of their payroll function can always decide to outsource their entire payroll process should the business need for it arise.
Increasing payroll complexities as the business grow
As an organisation expands, be it in terms of headcount or geographic scope, it is only inherent that payroll complexity increases. When organisations spend too much time focusing on resolving these payroll complexities, it means that there is less time for leaders and employees to focus on and deliver the broader organisation strategy. Outsourcing payroll to an external partner can then help to take away the burden of having to address increasing complex payroll issues such as taxes, statutory contributions or even accurate payroll calculations.
Proper data management to boost data security
Payroll data itself is a huge database of highly sensitive and confidential information, especially when it is tied to employee personal records. It is imperative that the outsourced payroll provider has robust data security controls and policies in place to prevent any data leaks. From an organisation’s perspective, engaging an outsourced payroll provider means that payroll data is centrally stored at a single point of location. This minimises the chances of fraudulent activities or data breaches occurring internally.
There is no solution to finding the “right” outsourced payroll partner. Likewise, there is no perfect payroll partner for every organisation. The solution is to find a payroll partner that is able to address and support the organisation’s payroll requirements and needs. Concurrently, expectations of the payroll services provided need to be mutually agreed upon in order to ensure a smooth and successful long-term partnership between the payroll vendor and the organisation.
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