Have you worked out your payroll outsourcing strategy, yet? Have you chosen the right external payroll providers for your business? If you have, congratulations! You are all set to experience the various benefits that managed payroll services bring to the table. If you are still ‘wondering’ whether your accounting firm must outsource its payroll processing and are still in two minds about it, it’s time to make a decision quickly otherwise your competitors will have a runaway advantage.
The global payroll outsourcing industry is set to be worth £8000 million by 2023. This figure alone illustrates that organizations across the spectrum are trusting outsourced payroll providers to take care of their payroll processing needs.
Let’s take a look at how you can strategically implement your decision to outsource your accounting firm’s payroll processing for the new financial year:
Begin by thinking strategically. This begins with the simple question – why?
Why should your firm think about outsourcing payroll?
If you look at the figure above, you will see that 60% of organizations that are outsourcing payroll, belong to the financial services industry. This means your accounting firm will be in good company, if its outsourcing payroll.
Take a close hard look at your payroll department. Do you feel that payroll is eating up a significant chunk of time that could otherwise be invested elsewhere in other strategic and profitable activities? If the answer is yes, it is time to move payroll to an outsourcing partner. If there is a case wherein you think the payroll isn’t managed well by the internal team, resulting in errors, it is time to outsource your payroll. There is also a chance that your firm is suffering from high employee turnover rates (in large CPA firms the figure is 17%!), which is also impacting your payroll process. For cases like these, deciding to move payroll outsourcing work to India makes perfect business sense.
Your objective should be to ensure the seamlessness of payroll processing and if this isn’t happening, you need help. This help comes in the form of focused expertise in payroll processing, that is offered for outsourcing companies specialising in payroll processing.
There is yet another big reason why your payroll management should be perfectly optimised and if it isn’t, it must be outsourced – employee engagement.
Seamless payroll management is one of the core pillars of employee engagement and motivation, going a long way in ensuring your employees are satisfied, happy and love working for your organization. You don’t want them experiencing disengagement with your firm’s work because they are not paid on time and/or think their benefits aren’t good enough or they are being unfairly compensated.
You just cannot afford to go wrong with your payroll, and if you think there is even a minuscule chance of that happening, you must leverage the benefit offered by managed payroll services.
The Way Forward
If you are now convinced that you need to outsource payroll, you must ensure that you are able to maximize ROI.
Identify the Activities that Need to Be Outsourced
Do you want to outsource the entire gamut of payroll activities to the external payroll providers or a part of them? It is important to identify the activities that are giving you grief and whose outsourcing will help bring a measure of efficiency to your payroll management efforts.
The above figure illustrates how across the pond, in the US, many accounting firms outsource monotonous repetitive work and services like year-end tax distribution form distribution and payroll check printing to save up on time, costs and the productivity of in-house resources.
As an accounting firm, you must figure out what you want to outsource. E.g. do you want the payroll provider to take care of employee data maintenance or you want this to be managed internally? Will the full spectrum of payroll inquiries be managed externally or some of them will be solved internally? Who will handle the tax filing and payment responsibilities? Who takes the onus of meeting country specific regulations and training for the same? These and many other questions should be answered before you start searching for outsourced payroll providers UK.
The idea is to pick and choose activities to outsource with an eye on efficiency, data security, your own comfort levels, and achieving cost efficiencies.
Choosing a Service Provider
This is the crux of your outsourcing strategy. Choosing one out of the numerous providers offering outsourcing payroll services. There are providers who are offering their services at really cheap rates and there are others whose services come at a price because these are backed by a proven track record of delivering tremendous value addition to their client’s payroll function.
It’s imperative that your choice isn’t dependent on the cost of the service but the levels of customer service on offer. Payroll is a critical function and you can’t take a chance with the quality of the services provider.
Take for example the regulatory complexities associated with a UK-based business. A business must ensure that payroll adheres to PAYE regulations such as recording employee pay (all components), calculating all deductions (tax, National Insurance contribution), payslips, and report pay and deductions to HMRC in FPS. This is just a small sampling of the intricacies involved in payroll processing. And this is just the UK. If your firm has offices across the globe, you will need to adhere to the payroll rules and regulations of different countries. Imagine the compliance challenges involved!
Your payroll outsourcing to India, will only work if the provider you choose to work has comprehensive payroll expertise and has the ability to meet the various payroll challenges. This requires an across the board range of expertise that cuts across diverse payroll regulations and payroll functions.
Another important element that you must look at is the infrastructure and technology in use at the service provider’s end. There are two sub-elements that you must take into consideration:
Your accounting firm’s payroll outsourcing strategy should be seen from ‘benefit-tinted-glasses’. Think of the benefits you are looking for and approach your outsourcing strategy accordingly.
So, what are the benefits you should look for:
Process Efficiency Resulting in Cost Efficiency: First and foremost, think of optimal payroll management as the biggest benefit of payroll outsourcing. All other benefits follow. Accountancy firms have gone on to achieve 50% cost reduction in payroll processing by achieving process efficiency by outsourcing payroll.
Better Compliance: If you have been facing compliance challenges like RTI compliance and more, working with the right company offering payroll outsourcing services is a good idea.
Save on Hiring Costs: Doesn’t matter if your firm is suffering from a high employee turnover rate; by working with reputed external payroll providers you will have access to a stable talent pool, and which can scale to meet your growth objectives. This way you can save on your employee overheads like training, perks and much more.
Faster and More Accurate Delivery: Improved productivity is practically useless if it compromises on accuracy and overall quality of the deliverables. By outsourcing your payroll needs, you not only benefit from faster turnaround times, but have the assurance that the job done is accurate and of very high quality every single time.
Expert Talent Pool and Advanced Technology: You don’t have to worry about the expertise of the talent you have hired; the focus of payroll providers is on making available only the best talent in the industry. Also, leading providers of managed payroll services, have empowered their services with transformational technology that allows them to serve your needs better.
And, finally, peace of mind. Outsourcing payroll should put an end to your payroll worries and the associated challenges you have been facing. This is the essence of solid and feasible payroll outsourcing strategy.
A Short Recap of Your Strategy
Payroll processing is a challenging task at the best of times. But there are also occasions when the situation calls for making quick modifications to payroll regulations and employers are asked to implement the same quickly. A case in point are the payroll challenges stemming from the ongoing COVID-19 pandemic. We are already looking at certain changes in the way wages are paid, which can impact payroll. It therefore makes great business sense to move payroll outsourcing work to India.
So, to summarize, it is imperative that you first know why you want to outsource your payroll and then go on to identify the payroll activities you want to outsource. You then move on to choosing a payroll outsourcing company for your needs. And herein, it is of critical importance that you not only look at the pricing, but give more importance to the quality of its services. Ideally, ask for references that prove the company’s ability to successfully deliver the services it promises.
What’s more, make sure to partner with only a specialist outsourcing company that has a proven track record of offering its services to accounting firms in the UK. This ensures, your strategy never fails.
To get your firm started with a free payroll outsourcing strategy, reach out to us for hassle-free, hand-off payroll solutions at firstname.lastname@example.org or call at +44 (845-838-2452). Our outsourcing experts would be happy to help.
My name is Vishal Kurani, the author of the QXAS blog and I appreciate you stopping by! I help accountants gain Accounts Outsourcing knowledge through my easy to follow blogs and guides. Download my free guide "The Accountants Guide to Making Payroll Profitable" to learn how to make payroll profitable for your accountancy practice.