In house or Outsource: Exploring your
Payroll
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Options
Whatever the size of your organisation if you employ staff, you
have to run a payroll. There are, however, a range of different
options when it comes to managing this vital function. For many
organisations the right option is to invest in payroll software and staff to manage the payroll
in house, but for many the better option is to outsource. There are a wide variety of reasons
why outsourcing may be the right option for your
organisation:
• It enables you to focus all your efforts on your core business,
which is particularly important if your organisation is small, or
if you need to keep headcount down
• It means that you don’t need to employ someone full time for a
task that has natural peaks and troughs throughout the month
• It provides you with access to extensive payroll expertise that
may be lacking in house
• It ensures that you are always up to date with all the latest
developments and legislation related to running a payroll without
having to invest in ongoing staff training or new software
• It enables you to share the workload with your outsourcer in a
way that suits you, or off-load it completely, depending on your
requirements
But to enable you to decide whether in house or outsourcing
is right for your organisation there are some things you need to
consider. This guide to outsourced services is designed to take you
through the options open to you, helping you to explore whether
outsourcing could be your route to improved efficiency and
effectiveness in payroll management. The true cost of running your
payroll. Cost is often the first thing that organisations consider
when looking at payroll options. Outsourcing may initially seem a
high cost option, but when comparing the costs of an in house to an
outsourced solution, it’s important to consider all the costs
associated with running a payroll.
Staff Costs
In house payroll staff bring lots of
advantages – they are on site when you have questions about the
payroll, they can respond immediately to anything that comes up,
and they are part of your team. But payroll staff also need
holidays, they can fall sick, and they require ongoing training in
both your payroll software and legislation. They must also be able
to identify which regulations are relevant to your business and
maintain accurate records, both of which take time and require
extensive payroll knowledge.
In addition, if your business is small, there may only be one
person responsible for processing the payroll, and that’s a big
risk when the payroll must be run, come what may.
Use an outsource team instead
Outsourcing your payroll is about more than simply having
someone to produce your payslips each month. Outsourcing means
having access to a team of payroll experts including payroll
administrators, a payroll team leader, and even a payroll
operations manager, who will take overall responsibility for
managing your payroll. Payroll administrators are focused on
building close
working relationships with customers, with the aim of getting to
know your payroll routine, the changes and the adjustments that
need to be made, enabling them to develop a clear understanding of
your payroll needs. With a team of experts only a phone call away,
outsourcing gives you access to individualised, expert advice
whenever you need it without adding to your own headcount.
Hardware, software, and all the other
stuff
The cost of running a payroll doesn’t stop with staff. In
addition it’s necessary to consider the cost of the hardware and
software necessary to run the payroll, both of which require in
house expertise to maintain them. For companies with a large and
experienced in house IT team this might be the best option, but for
others outsourcing can be more cost effective.
All wrapped into one monthly payment
Instead of having to lay out capital for software and hardware,
outsourcing will normally require only a one off implementation
cost. The cost of processing each payroll is then usually spread
over 12 months, and only invoiced once each pay period has been
processed. The cost of all the payroll stationery, which includes
payslips, envelopes, paper reports and printer consumables, is
usually included in your monthly
payment, so you won’t get any nasty surprises. Instead everything
is all wrapped up into one single price per payslip. In addition an
outsourcer should provide you with reports both electronically
(cutting down on paper) and in hard copy when required, providing a
complete audit trail for auditors or an HMRC inspection.
Retaining control
Running your payroll in house undoubtedly gives you total
control over the process, but outsourcing needn’t mean losing any
of this control.
While taking responsibility for ensuring all the necessary
calculations are carried out accurately, and that each payroll is
run in a timely manner, outsourcing allows you to retain complete
control over your data, secure in the knowledge that the payroll
will not be run without your final approval. Ideally you should
expect an outsourcer to work in the following way. Customers submit
their data to their outsourcer, which then calculates their payroll
before sending it back for approval. If there are any changes to be
made the outsourcer will carry them out, exactly as requested, and
then submit the payroll for approval again. Finally an update
report which details exactly what has been changed for any pay
period should be provided. Working in this way you, the customer,
retain control throughout, so outsourcing does not mean losing any
element of control over the payroll process, it simply means less
work for you.
Retaining flexibility
It might appear that one of the downsides of outsourcing could
be a loss of flexibility. After all if you have the staff in house
you will be able to set up your payroll exactly as you want it. No
two businesses are exactly alike and what you need from your
payroll may be very specific to your business. Working with an
outsourcer you can expect to gain from the expertise they have in
working with a wide range of companies. Using their expertise, an
outsourcer will look for ways to streamline your processes, and
work with you in the same way as you might with an in house payroll
department. So you retain the flexibility that you need, but
without the headcount and with a tailor-made service designed to
meet your needs.
Safety and security
Letting vital payroll data go outside your organisation isn’t
necessary if you take the option of running your payroll in house,
and you can ensure that it’s not vulnerable to theft, fraud, or
systems failure. But this all costs money and requires in house
expertise. If you take the option of outsourcing however, it
doesn’t mean jeopardising your data’s safety. Outsourcers are only
too well aware of how vital data protection is so you get the
benefit of their investment in the right technology and robust
disaster recovery plans, ensuring that your data is safe at all
times. Working with an outsourcer means that you can reduce your in
house investment in technology and instead be assured of data
security, all within a simple per payslip price. Whatever happens,
your people need to be paid, it’s non negotiable. We have many
years experience in running payrolls for thousands of customers.
It’s a big responsibility and we take it very seriously.
Sage Outsourced Services Outsourcing you
can rely on
We know that every payroll we run must be accurate, and run on
time, every time. We have to meet our customers’ deadlines, without
fail. We know the consequences of getting it wrong, which is why we
work hard, all the time, to get it right. Sage Outsourced Services currently processes more
than 85,000 payslips per month - running payrolls for organisations
with as few as 1 to as many as many as 2,000 employees, and we are
proud to say that we achieve extremely high levels of accuracy - in
excess of 99%. To ensure that we offer a service our customers can
rely on, we draw up a service level agreement at the start of the
project and then monitor our service levels and accuracy against
that agreement. We also ensure your data is secure by storing all
data off site, at multiple locations, so that in the case of a
disaster you can be up and running within eight hours or less.
Choosing the right option for you
We offer a range of outsource services so that we can match your
needs as closely as possible. You may simply want us to print and
distribute your payslips, or help with absence management, or you
may want us to do everything. You can choose the option that suits
you, depending on your needs and the expertise you
have in house.
Option One – a fully managed service
If you have absolutely no payroll knowledge in
house this might the best option for you. A fully managed service,
we handle every aspect of your payroll, from BACS payments and
pay-over’s to payroll related administrators, such as a pension
provider. In addition we provide all your reports, both standard
and bespoke, and in hard copy and electronic versions.
Option Two – a part managed service
If you wish to outsource your payroll but still want access to
your payroll software, and have some in house payroll knowledge
this could be the answer. With this option your Finance and/or HR
teams have access to your payroll data, and can take advantage of
our integrated HR and Payroll software, while Sage Outsourced
Services provides an experienced payroll administrator who can
advise on changing legislation.
Option Three – a bureau service
This option also requires some in house payroll knowledge and
gives you full access to your payroll system. You look after the
data entry and decide which part of the payroll process you’d like
to retain and which you’d like to outsource. So, for example, we
might produce payslips and make payments on your behalf to the HMRC
and your employees, while you take responsibility for entering
static data.
Weighing up your options
Payroll, like all other aspects of business, is always changing.
It’s a competitive market and costs for outsourcing and systems
maintenance can vary considerably. It therefore makes sense to know
what your options are and ensure you’re using the best and most
cost effective means of running and processing your payroll.
Testing the market, looking at what options are available and doing
a cost comparison could save you a lot of money. To help you
explore the options Sage Outsourced Services can carry out a full
cost comparison for you. It may establish that what you are doing
now is the best option for you, but it may also identify more cost
effective ways to manage the payroll function.
Managing the change
If you decide that outsourcing is the best option for you, then
changing couldn’t be easier. All we need to do is export your data
directly into Sage Outsourced Services’ system. And if you need a
bit more help, we can also provide payroll consultancy. If your
payroll is already outsourced, we’ll work with your existing
provider and run parallel payrolls before migrating your data and
going live. We set out all your requirements in a service level
agreement so everyone’s clear what’s expected, right from the
start. Finally, we strictly comply with the Data Protection Act and
all associated legislation to ensure that our customers’ data is
protected and kept safe in accordance with the law.
The right time to explore your options
In times of economic uncertainty it pays to look at your
overheads and assess the cost of each. To find out whether
outsourcing your payroll could save you time and money, call us on
0800 694 0568 and we can begin to explore your options.
Outsourcing – keeping your options open
Managing your costs – with a single price per payslip, all the
costs of running your payroll are wrapped into one easy to
understand payment
Staying in control – it’s your data, your payroll, and your
approval is needed before anything is processed
Safety and security – robust disaster recovery, and strict
adherence to data protection legislation, come as standard
Reliability – a service level agreement designed to meet your
precise needs, and continual monitoring ensure your payroll is
right every time
Flexibility – a tailor made service designed to make your payroll
as efficient and cost effective as possible