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Payroll is one of the largest costs for any business, with labour costs accounting for up to 70% of total expenses. And because it’s tied to the success of so many organisations, it should not be taken lightly. Getting payroll right is a sure-fire way to achieve employee happiness and lift productivity, and bonus — getting it right protects businesses from non-compliance.

Many companies choose to outsource their payroll to an experienced provider, while others choose to keep things in house, using their own employees and resources. However, the cost comparison between the two is vastly different and can make or break business success, especially when compliance requirements are at an all-time high and competition for talent is hotter than ever.

Outsourcing payroll can make the process more efficient and affordable while ensuring legislative compliance and providing a renewed focus on core business operations. Deciding whether to keep payroll in house or outsource it to a third party is a difficult decision, particularly for businesses that aren’t aware of the higher ongoing costs of hiring (and keeping) full-time payroll employees.

But once businesses recognise the intrinsic value of a fully managed payroll solution, they can set their payroll (and business) up for success.

The hidden (and not-so-hidden) costs of in-house payroll

On the surface, tackling payroll in house may seem like a cost-effective solution. However, the costs — visible or otherwise — can mount up, ending up higher than outsourcing to a provider.

Some of the costs of in-house payroll include:

  • Technology and associated upgrades, maintenance, and security.
  • Employee costs (salaries, super, work cover, leave entitlements).
  • Penalties for non-compliance.
  • Manual processes and human error.
  • Training and development.

Managing payroll in house can also be time-consuming and complex, especially when manual calculations are used. Some common pitfalls include underpayments, overpayments, minimum wage non-compliance, and failing to keep accurate records.

Mistakes aren’t just an inconvenience. They can be costly in terms of money and time and can also result in non-compliance.

Outsourcing payroll to increase efficiency and reduce costs

With a truly integrated payroll solution, businesses can save money by cutting down on manager and administration time, reducing labour costs, and ensuring accuracy and compliance. For example, employers can compare actual costs to schedules, budgets, and sales data as they occur. With real-time data, accurate labour costing is guaranteed.

Businesses like nothing more than saving money and improving productivity. Using an outsourced payroll provider is one of the easiest ways to achieve this. However, outsourcing payroll isn’t limited to just these two benefits (although they are great to have). There are many other benefits to using a fully managed payroll provider, including:

  • Having the confidence that payroll is compliant.
  • Ensuring business continuity.
  • Using innovative technology.
  • Eliminating resource risk.
  • Reducing time spent on providing internal payroll support.

The smarter way to manage pay

Many expenses stemming from in-house payroll management aren’t always apparent at first glance. But salary, technical, and hidden costs can accumulate over time. And, as costs continue to rise across the board, it’s more important than ever for employers to reduce expenses within their control.

Outsourcing to a fully managed payroll service can lift the burden from internal teams and help businesses stay in control of their finances.

Affinity Payroll’s managed payroll service delivers an automated solution that reduces risk and increases efficiency. We design processes that greatly reduce effort and lower costs while ensuring compliance is not only achieved but maintained.

Having the right payroll strategy and process in place can help maximise your ROI. To leverage the expertise of a fully managed payroll provider, contact the Affinity team today.


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For over thirty years, Affinity has been a trusted partner for mid-market and enterprise businesses in Australia and New Zealand, empowering them to transform their payroll operations. With a focus on turning payroll from a cost into an asset, we have established ourselves as industry leaders in delivering innovative cloud-based payroll software and exceptional payroll services.