Think back to the last time you restructured your office. You might have reduced your team, redefined roles and rearranged the furniture but what did you think to reconsider any processes that may be holding you back?
It’s often the older, more set-in-stone processes that go on behind the scenes that get left behind when we’re busy rethinking how other aspects of the business could affect performances.
Take payroll for instance, did you know that according to research from ADP, a staggering 55% of companies fail to measure the true costs of payroll? That’s a pretty significant number and one, which could be drastically cut if companies reconsidered their options, particularly outsourcing.
A few years ago, an article in HRWorld magazine stated: ‘Big businesses can afford to maintain big payroll departments. For small businesses however, an in-house payroll service is a money burner.’ With that in mind, let’s take a look at exactly how outsourcing payroll could save you time and money…
On the clock
Regardless of the size of your company, outsourcing payroll can save you crucial time. That time that could be utilised more efficiently to look at other areas of the business that need improving or fine-tuning.
Or perhaps the time is given back to employees to carry out their jobs efficiently without having to rush tasks at the last-minute in order to squeeze both the payroll paperwork and their projects into the out tray by the end of the day.
Whether it’s your time, your staff’s time or a mix of both, the chances are the hours could be divided up more efficiently. After all, working late is no one’s idea of fun and could lead to errors, an unmotivated work force and a bitter office atmosphere.
Outsourcing your payroll will save time by enabling professionals who are experts in their field to administer tasks such as:
- Processing payroll
- Cutting and distributing pay slips
- Calculating and paying withholding and employment taxes
- Preparing and distributing HMRC and tax paperwork
- Keeping up with HMRC and tax legislation updates
- Handling employee payroll enquiries
Underestimate costs; prepare to overspend
Remember that figure we stated earlier? That over half of companies fail to measure the true costs of payroll? If you’re not tallying up all the hours spent and resources used to complete payroll duties, you could wind up falling into this category.
A thorough cost assessment usually proves that businesses of all sizes save money by outsourcing the processing, tracking and filing of payroll documents. If you’re wondering how much time and money you currently spend on payroll administration, consider the following:
- Whose time is being used up and just how important is that time if it could be switched to another area of the business? Consider both your time and anyone who processes or gets involved with payroll. Often, many people in a small company will be involved whereas if you outsource, you’re handing over the responsibility to one sole provider who can release this burden from the rest of the team
- What savings would outsourcing provide? You may actually be able to downsize your team depending on how many people are involved in the process, saving you money which could be invested into other areas which are more in need of development
- Trust the statistics. According to a 2011 survey by BPO analysts Nelson Hall, the number one reason for outsourcing payroll continues to be cost reduction, with approximately 85% of respondents citing this as their primary business goal
If you can’t beat ‘em, join ‘em
You’re never going to get anywhere in business copying someone else. In almost all other areas, it pays to buck the trend and be original. But when it comes to processing payroll, did you know that a recent survey of UK firms by the CIPD revealed that around half of organisations intend to outsource part of their HR activities within the next three years?
There are countless reasons why outsourcing payroll has become so popular (increased quality of service, streamlined processes, increased compliance, reduced risk and introduction of advanced new HR technology) and it’s a rare that you will ever match the exceptionally high standards of the professionals who pride themselves on delivering meticulously accurate, prompt payroll services so if you can’t beat ‘em, it might pay to join ‘em.
About the author: Morgan Danaher is Managing Director of Ceridian Ireland http://www.ceridian.ie