7 Reasons to Outsource Payroll

Lee Thomasson | Business Development Manager, CloudPay

Payroll is a core function within every type of business, but it can still be a complex practice to deal with. Running payroll accurately can consume large amounts of time, money and human resources, and can come with severe penalties if mistakes are made. It’s no surprise, therefore, that many organizations choose to outsource their payroll to an expert provider instead.

However, it can be difficult to choose the right payroll provider to partner with, and to establish whether or not there is a sound business case for outsourcing. This blog explores seven compelling reasons why outsourcing payroll might make sense for your organization, and what you should look for in a prospective provider.




Why would companies process payroll themselves?

Every company is different, but outsourcing generally makes sense for most businesses. Indeed, the circumstances that a typical company would need to have to make in-house payroll the better option is surprisingly narrow.

For in-house payroll to trump outsourcing, it needs to be clearly more cost-effective, and driven by a company that wants to hold onto control of both payroll and sensitive information like wage data. This generally points to smaller companies with low staff turnover, where payroll functions can be run routinely with very few changes from run to run. However, most businesses will fall outside these very specific parameters, meaning in-house payroll may be inefficient, expensive and prone to human error.

The advantages of outsourcing payroll services

In the technology-led world of today, outsourced payroll services generally mean getting a tech-led solution that can automate parts of payroll processing. Businesses that outsource to payroll experts quickly find a burden lifted from them in several key areas:

  • Saving time: without having to worry about the day-to-day grind of payroll processing, staff are freed up to focus on more value-adding work and making more strategic decisions. No longer do staff have to do time-consuming tasks like calculating payroll, printing or distributing paychecks, generating reports, or preparing tax submissions to the authorities.

  • Saving money: financial efficiencies can be found in a number of different ways through outsourcing. These ways to save money include streamlining the handling of paid time off requests, reducing the resource needed to field employee requests, and cutting the risk and expense of penalties for non-compliance with regulations.

  • Improving employee experience: using technology through outsourcing makes it possible to massively expand the self-service options you can deliver to your workforce. Employees can feel more positive about payroll if they can quickly and easily resolve issues themselves, while innovations like Earned Wage Access give them flexibility and autonomy in how and when they’re paid.

  • Reducing human payroll errors: automating data processes cuts out the risk of human errors creeping in, which is always a risk with such mundane and repetitive payroll tasks. These errors can be both costly and irritating for employees and for companies, and payroll generally runs much more smoothly without them, giving management more peace of mind.

  • Integrating payroll data: an outsourced solution can ensure that payroll data is co-ordinated, and that it can be applied to several different use cases. For example, it can make sure that the right benefits contributions are always made, maintain the accuracy of tax and social security deductions, ensure compliance with government regulations, and provide insights that can be useful to the business as a whole.

  • Improving payroll security: it’s natural to have some concerns about bringing in a third party to help with payroll, given the sensitivity of confidential payroll data, and its vulnerability to identity theft or fraud. Good providers with a reputation for security can demonstrate how they can keep your payroll information and data safe, as well as provide backup systems in case of any unforeseen issues.

  • Accessing greater expertise: although technology has transformed payroll, it’s still an area where human knowledge is prized. The right provider will be able to help you navigate regulations and compliance requirements, process tax submissions and other calculations smoothly, and provide country-specific expertise if you’re looking at an international expansion.


Choosing a provider & outsourcing your payroll

As the above points demonstrate, the upsides to outsourcing your payroll can be incredibly powerful – as long as you choose the right one for you. When exploring payroll outsourcing companies, check out their experience and credentials, their security provisions, and the commercial models of the payroll software solutions they offer. And if you need multi-country payroll outsourcing (or are intending to do so in the near future), then checking out the global payroll expertise they possess is a must.

To find out more about CloudPay and the impact we can have on your business, find out what makes us a standout partner for global pay here.


Lee Thomasson | Business Development Manager, CloudPay



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