In line with a global trend, the number of organisations outsourcing their payroll services is increasing year-on-year and, dispelling a commonly held notion that outsourced payroll only suits organisations with a certain number of employees, a recent study showed a consistent outsourced percentage across all ranges of total employee numbers. So, if workforce size is not always a determining factor, what might influence an organisation to outsource its payroll? Here are just a few points to consider:
Lack of knowledge
Organisations opting to use payroll services often do so because of concerns about their internal payroll knowledge and capability; a desire to be compliant and an intention to mitigate the associated risks. UK payroll is complex and internal teams require an in-depth understanding of the payroll landscape they inhabit. Knowledge comes at a cost, in terms of both training and lost time and employees must maintain currency.
Single-point sensitivity is a concern for many organisations that would struggle if they lost the knowledge held by one or two key staff to turnover, retirement or significant illness. Many organisations also seek to segregate payroll duties to help mitigate the potential for fraudulent activity.
Knowing you can configure your payroll system to accommodate awards or agreements is one thing, but you must also be certain that your payroll practitioner can actually do it. Organisations not using compliant payroll technology risk breaching regulations and suffering both financial penalties and reputational damage.
Weighing the options
When investigating payroll outsourcing as an option, you should consider both the gains and potential risks involved. Managing a payroll in-house requires investment in expertise, payroll technology and training. It requires dedicated resources that are a salary and on-cost. The potential for single-point sensitivity, where the organisation relies on one or two individuals for their expertise, must also not be overlooked. In contrast, an internal payroll team can act more quickly than an external one that is servicing numerous different clients. They can be more responsive to immediate requirements and are able to generate data insights that inform strategy.
Payroll outsourcing is a viable option for many organisations, big and small. When deciding on outsourcing, you should be considering a number of elements such as cost, appetite for risk and desire to extract insights from payroll data. Most importantly, consider whether a potential vendor has certified data security measures, flexible options for client involvement and a capacity to give you unfettered access to your own data. After all, you may have outsourced payroll processing, but not your responsibility.
Alongside the provision of robust, compliant payroll and HR management software, Frontier Software is an experienced outsourced services provider; set up to manage the changes that are a constant for payroll. Plus, the inherent flexibility in the service offerings means Frontier can manage as much or little of the payroll process as suits you – and change it at any time. Trust Frontier Software for payroll whatever your requirement.