How on earth can accountants ever profit from payroll? It’s sounds contrary to common-knowledge, and surely that’s the case, right?
We've lost count of the number of times clients have told us “Payroll is a loss leader”, “It’s time consuming, tedious and resource intensive”, or “It’s an over-regulated function, so it is hard to keep up-to-date.”
Having offered payroll outsourcing services for 12 years now, we’ve discovered that it’s not a loss leader as you might think at first. There are many ways accountants can improve their practice profitability by offering a payroll service.
So how can you profit?
Think of it in a different way
In the past decade the payroll situation has changed. New tools and cloud technology are making it easier to process payroll online. In fact, if you haven’t considered adding payroll to your service mix, you might be in for a surprise.
Things are changing, and after decades of “I don’t do payroll”, accountants are opening up to the idea of offering payroll services.
Still sceptical? Read on.
How can you win with payroll?
In our profession, it’s important to be a sceptic. Sound judgement, logic and proof are core to an accountant’s existence. So why should accountants offer payroll, when they have traditionally refused to do so?
Here are the top 5 reasons:
- One-stop shop– most clients expect a one-stop shop. We all have heard now that clients want their accountant to be a virtual CFO, take care of the tax and financial needs, including payroll. A total package means you can retain clients and improve year-long cash flow.
- Stronger client relationships – the more of your client’s work you manage, the closer your relationship will be.
More services = more loyal clients = lower risk of losing clients.
- Upsell – payroll will potentially open the door to pitch services such as financial analysis, tax preparation, software consulting, etc.
- New clients - You will attract new clients who want an all-in-one package
- You won’t be left behind – If you offer payroll and your competitors don’t, you are ahead of them. It also enables you to generate more revenues that a traditional firm.
The case for payroll is a complex one. It's a topic we have covered in some detail in our guide to making payroll profitable.
Making payroll profitable - the power of outsourcing
Payroll is profitable if you can sell it for more than it would cost you to do it in-house. Outsourcing helps here, by reducing the time, effort and specialist staff involved in delivering payroll.
One of the best ways to understand how you can profit from payroll is to compare in-house payroll vs outsourcing. Here’s what in-house payroll generally involves, compared with how an outsourced payroll model works.
Get a head start
The arrival of cloud accounting has changed the way firms offer payroll services to its clients. If your firm is not offering payroll services, now is an opportune time to do so.
And if you don’t, you could find yourself losing customers. In fact, your clients are more likely to go to a competitor that offers payroll as part of a full-service.
So it makes sense to act now. Take a look at how outsourcing can make the service more profitable. Then you can offer payroll to win new clients and make more money from the existing ones.