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Paying employees the right amount at the right time sounds simple in theory. However, as a business grows, so does the volume of work. The larger an organisation, the more time-consuming and complex payroll becomes. Even if a business has a payroll expert on board, it can still be time-consuming and immensely complex, especially if the organisation is running legacy technology with limited resources.

Moving to an externally managed payroll service isn’t a decision to take lightly. However, for many businesses it’s often the right one. When businesses outsource payroll management, they’re guaranteed compliance, expertise, cost benefits, and modern technology that provides additional operational advantages.

While there is no ‘right time’ to outsource payroll, mistakes can creep in and evolve into larger problems the longer they aren’t properly dealt with. Payroll errors can impact employee morale and retention as well as company image and reputation.

To avoid the risks that result from poorly managed payroll, look for the following five warning signs that indicate it’s time to consider other options for managing the payroll process.

1. You need to contain costs

While it looks less expensive at first glance, managing payroll in house is anything but.

Indirect costs for equipment and resources, technology upgrades, time and labour costs, and the cost of human error can add up and create headaches for business leaders. When organisations need to contain costs, payroll training may not be an option, and this can lead to knowledge gaps in constantly changing legislation and requirements. Legacy systems also pose a significant challenge, forcing payroll professionals to rely on outdated technology with limited functionality and adaptability to support a company as it grows.

Outsourcing payroll is a significantly lower-cost option because it frees up time and resources, enabling businesses to focus on other tasks.

2. Your team is stretched thin

Payroll can be a stressful and complex function that requires a specialised set of skills. Often, these skills are held by seasoned payroll staff moving closer to retirement and leaving their specialist roles vacant.

According to the Australian Bureau of Statistics, payroll job growth is weaker in 2022 than in previous years and has experienced a relatively high number of job vacancies — more than double what they were before the COVID-19 pandemic.

If the numbers continue to drop, it will disrupt organisations, making it even more difficult to find qualified professionals to replace payroll managers once they move on. When businesses notice empty seats in their payroll departments, it’s time to look outside the box.

3. You’re experiencing rapid company growth

When organisations start out, they often don’t see a need to outsource payroll because their team is small, and it doesn’t make sense cost-wise. However, as the business grows so does the employee head count, which can make payroll risky, complex, and time-consuming.

This is especially true when companies hire a mixture of full-time, part-time and contracted employees. Rapid expansion also makes it harder for managers to ensure their payroll team is up to date with the latest legislation.

Outsourcing payroll accommodates rapid growth by supporting business continuity and reducing risk exposure, enabling leaders to spend more time focusing on core operations.

4. You’re noticing more data-entry errors

Payroll is one of the most important departments in any organisation, playing a strategic role in understanding how pay impacts business. When payroll employees are overwhelmed with the sheer volume of work they can make costly mistakes. Under or overpaying employees impacts morale and may lead to a decline in employee engagement and performance.

If payroll accuracy is on a slippery slope downwards, this may be an early warning sign that it’s time to outsource payroll.

5. You’re running payroll late

Employees rely on payroll to provide them with consistent pay time and time again. When employees are paid late or incorrectly, they lose faith and may even start to look elsewhere.

Asking your employer why you weren’t paid is an awkward conversation for employees, and worse for payroll managers who must provide a reason. In a market competing for workers, it’s never been more important to pay employees on time.

When payroll consistently runs late, it’s time to consider outsourcing.

Developing a payroll process that works

Payroll is a time-intensive process, especially when businesses factor in compliance with tax and legislative requirements. If your organisation is growing and your team is feeling the pinch, it might be time to move your payroll from good to great by outsourcing.

Choosing a payroll service provider can be difficult, but we’ve made the decision simple.

Affinity’s managed payroll service delivers a cost-effective solution that takes care of your entire payroll operation. We have a team of qualified and highly experienced payroll managers who can help your business design processes that greatly reduce effort, lower costs, and ensure compliance is achieved and maintained.

If you’re ready to move to an outsourced payroll solution, contact the Affinity Payroll 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.