7 December 2020 - Reading time: 5 Minutes
Keeping payroll in-house can mean your processes end up out of control. Whilst informed HR and finance leaders know the benefits of outsourcing payroll, others remain cautious. This is understandable; looking after your people is crucial now more than ever as we move towards the flexi work revolution and remote ways of working.
However, outsourcing offers a wealth of advantages that help you stay in control of several business areas including finance, security, compliance, performance, business continuity and data insight. Debunking outsourcing myths, this blog explains how you can confidently move to fully managed payroll whilst retaining and even improving control.
The more obvious costs associated with retaining an efficient in-house payroll team throughout the employee lifecycle include recruitment, training, benefits and salaries, not to mention annual leave and sickness. The more ‘invisible’ costs encompass automated payroll technology (plus maintenance, licences, upgrades, IT support etc.), overheads and any consultancy or outsourcing (to tax specialists, for example).
Outsourcing your payroll wraps these costs up in one management fee. It also offers a variable payroll cost base rather than a fixed cost associated with in-house payroll, resulting in a more elastic and scalable operation, with increased ROI. Unless you have a very predictable business model and can anticipate staff levels in this volatile climate, outsourcing is likely to provide greater cost control, reducing your total cost of ownership (TCO) by at least 20% when you partner with a credible supplier.
Responsibility for payroll compliance, data security and HMRC submissions can feel like a full-time job, trying to stay in control of legislation, audits and deadlines. Even if you outsource aspects to specialists, accountability is likely to sit with you and your organisation.
Outsourcing your payroll, however, passes responsibility to the provider, including maintaining ISO20071, ISAE3402/SAS70/SOX, saving you the cost, time and stress of on-going management in-house. A best-of-breed payroll provider will invest in business-grade security to protect your people’s data and remain compliant with standards such as GDPR. Consider it a case of outsourcing accountability, rather than losing control.
The cost of non-compliance can be considerable, not to mention brand damaging. Missing HMRC deadlines, tax errors or failing an audit (such as a Check of Employer Records or Employer Compliance Review) incurs penalties and sometimes interest. Outsourcing your payroll means you are always ‘audit-ready’ and 100% in control.
Compliance is intrinsically linked to payroll performance, ensuring calculations adhere to the latest guidelines and legislation. This can change frequently and be very complex especially when applying local legislation to a global workforce. In-house teams may not feel confidently in control or spend too much time getting to grips with legalities and troubleshooting. If you resort to consultancy for help with compliance, these costs can quickly spiral out of control. By comparison, a fully managed service will include expertise and advice – on a global scale – as part of your package.
If your payroll is currently processed in-house, are you continually measuring and improving it? Do you know your accuracy levels, for example? One myth of outsourcing your payroll is that you lose control of standards and service levels, but the opposite may be true by establishing an SLA. A credible partner could agree to provide a minimal service level of 99%+ for accurate and timely payroll. This not only puts you in control of performance but also in control of benchmarking. Other KPIs include payroll schedule key dates adherence, third party payments, level of live errors, out of pay cycle calculations and response time for general payroll queries. Adhering to the agreed payroll processing schedule through a managed service provides a ‘safety net’ for catching errors before payday.
Staying in control of payroll performance positively influences the employee experience; indeed, 71% of C-Level employees feel that the visibility of payroll has increased in recent years. Good payroll is becoming increasingly key to attracting and retaining talent, with firms like Glassdoor providing transparent reviews of salaries and payroll. Check out the net promoter score (NPS) or customer reviews to help evaluate potential managed service providers.
Whilst in-house payroll may provide end-to-end control, this also necessitates a business continuity plan without a single point of failure. Ironically, this could leave you feeling out of control in the current climate. Covering staff absence or dealing with major technology issues are common problems but you may now face implementation of job support schemes and regional lockdowns. As the recent COVID-19 pandemic has shown, upheaval can occur almost overnight. Are you really in control of business continuity with a resilient plan that safeguards payroll? When you outsource, ensuring teams can work remotely and efficiently is no longer your problem, and payroll will not be negatively impacted.
A final point to raise is that outsourcing your payroll will provide insight-rich people data. Through regular reports and also ad-hoc analysis, your organisation will benefit from the ability to monitor KPIs such as absence, performance, turnover, gender and diversity statistics. If your in-house system doesn’t allow quick and accurate reporting capabilities, outsourcing will certainly give you greater control over data. Drive strategic decision making and gain a real-time snapshot of your teams and departments.
In summary, greater financial control is a major benefit of outsourcing your payroll compared to retaining it in-house. Besides direct labour costs, consider CapEx, technology and additional resources. One overall management fee could well be more cost effective and efficient. Passing accountability to a professional payroll provider gives you more control over conformance and performance, with minimal service levels to ensure correct pay is transferred to employees on time, every time. Outsourcing your payroll is an investment when you select a provider that feels part of your team and ensures a smooth implementation. They will put you in the driving seat whilst taking care of your greatest asset – your people.
Here are some of the fundamental whys and whats you need to make an airtight plan for future-proofing your payroll.
With workers concerned about their health and job security, it is vital payroll teams look at what they can do to improve confidence, so workers don’t lose faith in the company they work for. This blog examines how good payroll and workforce management can increase employee trust.7 December 2020
CIPP’s Senior Policy & Research Technical Lead, Samantha Mann, tells us how she fell into the world of payroll and her predictions on how payroll will change in the next 10 years.9 November 2020
Misconceptions around payroll outsourcing could be holding back your business. Our customers find that moving to a managed payroll service pays them back dividends, driving productivity, increasing ROI and giving payroll teams the opportunity to focus on strategic rather than tactical initiatives.
We understand that managed payroll can be a daunting topic, so we’ve put together some useful information to help you make an informed choice about your payroll strategy.
As a leader in payroll and/or finance, you know that payroll is subject to HMRC rules that are complex and changeable. This blog explains the importance of benchmarking your payroll processes to ensure they are always ‘audit-friendly’ and efficiently adding value to your organisation.
Revealing the hidden costs of in-house payroll vs. outsourcing, this blog presents a perspective that could save you money in the long-term, improve your payroll and help you stay competitive.11 October 2020
Businesses are waking up to the power of payroll. Agile financial leaders are prioritising investment in payroll technology and automation through SaaS or outsourced solutions. Read our blog to find out why.14 September 2020
Savvy CFOs and finance leaders have spotted an opportunity to maximise ROI and increase operational resilience by outsourcing payroll operations. We explain the financial benefits in our blog.14 September 2020
National Payroll Week: Championing your payroll pioneers. At SD Worx, we’re known for being the ‘Payroll People’ and we have some pretty amazing individuals who love payroll just as much as we do. But now it’s over to you. Who is YOUR payroll hero?7 September 2020
As we emerge from Covid-19, one of the most economic and socially disrupting periods of our lifetime, it's critical for businesses to scrutinise and challenge their payroll operations. This is where the degree of your payroll maturity matters: it impacts your whole organisation, from operational efficiency and exposure to risk, to employee experience.6 August 2020
HR leaders play a pivotal role in the future success of the workplace. Cathy Geerts, Chief HR Officer at SD Worx, explains more in her blog.22 July 2020
Over the years, Fiona McKee, HR Director at SD Worx UK and Ireland, has heard many inaccurate, and often amusing, assumptions of what working in HR is like. She shares the most common misconceptions in her blog.22 July 2020
It’s fair to say that HR and Payroll teams have been tested as the Covid-19 pandemic unfolded. But after several months of firefighting, many organisations recognise that they need to make significant changes to their payroll and HR operations.2 July 2020
How to build resilience into your new normal strategy
Payroll and HR data has the potential to unlock strategic value that has not previously been so readily available and accurate.1 July 2020
Misconceptions around payroll outsourcing could be holding back your business. Our clients find that taking the step to outsource pays them back dividends, driving productivity and giving payroll teams the opportunity to focus on strategic rather than tactical initiatives. We understand that payroll outsourcing can be a daunting topic, so we have debunked some of the most common myths to help you make informed choices about your payroll strategy.26 June 2020
HM Revenue and Customs (HMRC) has updated guidance in readiness for the commencement of the second part of the Coronavirus Job Retention Scheme (CJRS). Simon Parsons, Director of Payments, Benefits & Compliance Strategies at SD Worx UK, shares his interpretation of the changes and what this could mean for employers.P. Simon Parsons - 15 June 2020
Are you prepared for the rise of the long-term home worker? Help your employees thrive while they are working from home with these top tips.20 May 2020
As the pressure of payroll continues to amplify, here are some best practice tips to improve payroll continuity.13 May 2020
The way we work is never going to be the same again. Find out which big changes will affect HR.11 May 2020
Our resident payroll and legislation guru answers your questions about furlough and SSP.29 April 2020
We’re here to help your payroll stay consistent during uncertain times. Find out how our experts can support you during this time.24 April 2020
What is the process of putting in a claim for furlough? We get to grips with the steps you need to undertake.23 April 2020
The right workforce management module can help businesses stay afloat during these tough times and avoid common pitfalls.15 April 2020
Hundreds of UK businesses have asked staff to work from home to combat Coronavirus. Can these measures help your remote workforce?10 April 2020
In our second #KeepItHuman interview, Oliver Mead, SD Worx Sales Director, discusses how he’s helping his team to adapt to remote working.1 April 2020
Discover how Coronavirus is affecting employee pensions and get to grips with The Pension Regulators advice.31 March 2020
Discover the latest customer information update from SD Worx regarding the Covid-19 virus.30 March 2020
Paul Thickett, SD Worx Payroll Services Director, shares how he’s keeping the UK paid and motivating his team during this challenging time.24 March 2020
We’ll help you make sense of the government’s advice on Statutory Sick Pay and taking care of your employees during COVID-19.24 March 2020
Has your business temporarily closed? Find out how the Coronavirus Job Retention Scheme could support your business.24 March 2020
There have been many publications about the Good Work Plan over the past 18 months and it can be confusing to work through complex, legislative documentation to understand how you stay compliant. While the good work plan covers many topics, this blog aims to take you through one aspect of this, Holiday Pay, and asks the simple question – are you ready for the changes?29 October 2019