Payroll can be a time-consuming task that many business owners believe is easier to outsource. Outsourcing payroll also solves key problems that have appeared since the COVID-19 pandemic.
A major lesson from the pandemic was that process management is crucial to the success of any company. Without it, even the smallest speed bump in business-as-usual can upset the workings of the entire operation. Anyone with a clear vision of the future should be looking for ways to embrace solutions that make their business more robust and adaptable.
In-house payroll challenges
No matter how much technology simplifies the process, it is still expensive to have an in-house payroll system.
Payroll teams and business owners spend their precious time auditing, calculating, generating reports, dealing with government agencies, and even more hours staying current on payroll legislation. Technology will make some of these tasks redundant, but in-house payroll is likely to remain an enormous time-sink for years to come.
It can also be a complicated operation that increases security risk for the whole company. Even with trustworthy employees, an in-house payroll system can be flawed in ways that are more likely to create opportunities for identity theft, embezzlement and manipulation of company data for personal gain. This doesn’t even begin to consider the risks of cybercriminals exploiting vulnerabilities to steal sensitive employee data. All of this can lead to serious penalties from authorities.
To avoid fraud and other safety issues, on top of their regular responsibilities, payroll teams must also perform regular reconciliations. Again, this takes time and leaves the company open to the risk of human error.
Then there is the continuity risk of keeping everything in house. If your payroll team is offline for any reason, will your employees still get paid? The pandemic showed that many organisations were simply too dependent on key personnel and lacked adequate backup and disaster recovery.
Technology is another hidden cost. Hardware and software upgrades and maintenance along with training and support all add up. Achieving legislative compliance might also require costly — and sometimes forced — technology upgrades.
Outsourcing as a solution
Payroll outsourcing is a service in which a third party manages pay processing, administration and payments. It offers companies the chance to access expert knowledge and expertise without having to hire payroll specialists.
Companies wanting to be pandemic-proof should include outsourced payroll in their overall strategy. This will save time and money while reducing administrative stress, so you can focus on the more productive aspects of the business.
Outsourcing payroll also lifts the burden of staying across changes to employment-related laws and regulations. In the height of the pandemic, governments introduced new laws and changed others — quickly, and in ways that were difficult to understand. Employment regulations, compliance, tax laws, and data management requirements can also vary between Australia and New Zealand.
Part of a fully managed or outsourced payroll professional’s remit is to know all the ins and outs — no matter where your company is operating or what regulations are being altered.
During a crisis, it’s much more difficult for payroll staff to manage taxes and comply with tax regulations. Outsourcing makes it easier to keep track of taxes regardless of a company’s size or location.
Payroll providers use the most advanced encryption technology to store and protect sensitive information. Monitoring software also makes it possible to block potential threats and protect gateways such as those used for tax filing and banking.
In summary, there are many benefits to outsourcing payroll to an expert:
- More time for key personnel.
- Lower payroll processing fees.
- Respecting tax rules and regulations.
- Providing guidance and answering payroll-related questions.
- Access to advanced payroll technology.
- Secure electronic systems that reduce the risk of data breaches.
- Reducing errors, downtime and troubleshooting.
In-house payroll processing can be a significant expense for an organisation. Some businesses will prefer to wear that cost and retain payroll in house for other reasons. But the key metric for any company considering making changes to their payroll systems is to ensure that the final process is as efficient as possible.
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.