- Mark J Galea
- Sep 29, 2017
- Business, Business Strategy, Growing Your Business, Management, Organisational Performance, Payroll, People Management, Performance Improvement, Quad Malta, Set-up
- 0 Comments
Many employers are outsourcing their payroll service to third parties, and here are some of the reasons why:
Free up time – Payroll computation is a time-consuming process. Outsourcing payroll can free up staff time to pursue more important value-added and revenue-generating activities, thus boosting productivity.
Reduce costs and boost productivity – In addition to the Payroll Administrator’s salary, as an employer you need to pay NI contributions; statutory bonuses and other entitlements; leave and sick leave (over 1 month of unproductive hours paid to an employee). The direct costs of processing payroll can be greatly reduced by outsourcing this function. In addition to enjoying great savings on the cost of employment, you will save the opportunity cost (not to mention once again the lack of productivity) spent on time dedicated to hiring any possible replacements for long absences and backfills. When, you also factor in other expenses related to the investment and maintenance of hardware and software (yearly updates, license renewals, maintenance agreements etc), you will realise that the saving you make by outsourcing payroll is actually much bigger.
Ensure confidentiality – By outsourcing this function, you are reducing the number of people within your company who are privy to information related to pay packages, pay rises, and other information that can easily be leaked to other parties within the company.
Ensure continuity – If your Payroll Administrator falls ill, or needs to take leave around the end of the month, the timely issuance of employee’s pays and salaries will disrupt other operations (it’s usually Finance that takes the hit). Pays and salaries need to go out on time in order not to demoralise your employees. When outsourcing your payroll function, you are protecting your business from these risks.
Alleviate the pain – In-house payroll is a headache at best and a nightmare at worst. By outsourcing this function, you will eliminate a tiresome source of regular pain.
Avoid technology headaches – A constant question is whether they have the latest version of their payroll software and the most recent tax and NI bands installed on their computer. Using the wrong tax computations will result in penalties and big employee dissatisfaction.
Leverage outside payroll expertise – Most business professionals tend to be so focussed on meeting targets set by ambitious budgets, that they tend to overlook constantly changing regulations (both statutory and those issued by the EU), yearly changes in NI categories, and frequent changes in tax bands.
Losing the Payroll Administrator – If your Payroll Administrator gets a new job, you will have to spend considerable time and money looking for a resource that is getting scarcer due to a number of different reasons. Consequently, salaries for Payroll Administrators are shooting up. Using an outside service eliminates that business risk.
- Mark J Galea
- Mar 30, 2017
- accountant, accunts, Business, Business Strategy, credit, debit, Growing Your Business, HR, Management, money, Organisational Performance, outsource, outsourcing, paperwork, pay, Payroll, payroll administrator, People Management, Performance Improvement, Quad Malta, salary
- 0 Comments
If you know at least one person who takes care of payroll, then you’re probably familiar with all the annoying stories of disgruntled people they have to deal with every day.
Going out for a Friday drink with a friend of mine, who’s a Finance professional, means one thing – listening to her frustrations over payroll, accounts and the constant backlog she has to deal with.
As much as I can imagine payroll being a routine job, to say the least, I still cannot understand why is it such a headache for most companies! At the end of the day, if you’re running a business, you also have to pay your employees and somebody has to deal with this crucial process. If you get the employees’ pay wrong, you’re most definitely asking for trouble.
Working at Quad Consultancy gave me an excellent opportunity to do a bit of research to see why they claim that by outsourcing payroll, people’s life can be made easier.
As it turned out, it’s not payroll itself that is a nightmare but rather the way the companies decide to go about it. If like my friend, you work for a small or medium-sized company, then most likely you don’t have a separate payroll department. It’s either HR or Finance who ends up doing it, and…guess what? Because of deadlines and other urgent matters, payroll sometimes ends up being seen as a “side job”…and additional task…a nuisance!
They both seem to be thinking that accountants are there for numbers and HR to… well, deal with people. Unfortunately, payroll needs a bit of both and hiring a payroll administrator equals additional cost to your business.
I can imagine how the time to run the payroll function is a cost, but when you add the initial investment in the software, and the yearly costs of software updates, and maintenance agreements, plus the employee’s leave, sick leave, bonuses, NI and other costs, then the natural question is: “is it REALLY worth it?”
And let’s not talk about the headaches of payroll administrators needing to take sick leave at the end of the month. What about replacing them when they leave? Now THAT is a nightmare!
But it CAN get worse! Have you considered the issue of confidentiality? How many times have companies experienced leaks of information about salaries and – horror of horrors – those EVIL performance bonuses?
So, it seems like I got a pretty straightforward answer to my question about payroll being a company’s nightmare.
What’s the solution to your payroll problem?
I’m neither a business owner nor a frustrated employee dealing with payroll. However, I cannot understand why anyone would want to go through so much hassle and expense. It’s just easier to leave it to professionals who will take a headache away at a CHEAPER cost!
Why would you waste time and money on payroll when you can free up the time and boost the productivity by investing in skills they will actually want to learn and use at work? Outsourcing will definitely work out cheaper than hiring a payroll administrator, training them and then watching them leave because they got bored of doing the same thing month in month out…or because they were offered more by someone else. REMEMBER, a good, reliable Payroll Administrator comes at a cost. A huge one indeed!
Now I’m off to meet my friend, and guess what I’m going to be talking to her about! Yes, you’re right. I’m going to talk to her about payroll outsourcing… Maybe in a few weeks, we’ll be able to talk about boys, clothes, hangovers, gossip and other interesting stuff…