Outsourcing Payroll Enhances Your Efficiency

Companies often underestimate the costs of handling the administrative side of their business. A white paper prepared by PricewaterhouseCoopers LLP analyzed the true costs of operations, covering in-house management of payroll, workforce issues, scheduling and record keeping. Surprisingly, the study indicated that despite the use of automated payroll systems, operating costs related to payroll administration increased rather than declined over the years.

The Costs of In-house Payroll Management

In-house payroll processing involves a commitment of manpower, office space and ironically, more salaries for staff dedicated to this back office function. Payroll and benefits specialists need to stay on top of labor and employment law updates to ensure that payouts, benefits and taxes are in line with applicable guidelines.

The frequency of payouts may vary from one business to the next. Companies with more frequent payouts may find the process tedious and time-consuming even when the process of collating time records and preparing the payroll has been automated to some extent. Automated systems require review and maintenance, adding to operating costs.

The Outsourcing Option

Many small to medium-sized companies are finding that turning over payroll processing to a trusted third party specializing in this task can affect the bottom line significantly. It will allow businesses to focus their resources on income generating core business as costs of maintaining a payroll department can be reduced if not eliminated.

Companies in Wisconsin and elsewhere that outsource the payroll function will also reduce paperwork. The payroll service vendor generates pay stubs, W-2 forms and paper checks, reducing expenses for office supplies. Additionally, using the services of a payroll processing provider will make it easier to transition to automatic deposit sent to individual employee accounts. Employees prefer this method because the funds can be accessed using a debit card as opposed to cashing a check.

Third party payroll specialists guarantee no downtime for their services because they have contingencies in place in case one of their staff fails to show up for work. With in-house management of the payroll, the absence of one of the processors could affect the workflow and delay the payouts.

Oversight of the Payroll Provider

When a payroll provider makes a mistake that costs the client company, the provider may be held liable for these costs. Businesses can also change payroll providers as they see fit and without worrying about separation pay and other monetary considerations for employees who are let go.

Many providers have alert systems in place that can be triggered by patterns of possible fraud and manipulation of the payroll. It is similar to having another layer of checks and balances to manage the payroll.