November 19, 2019Coronavirus, Managed Payroll Support, Payroll & Tax Support
The Benefits of Outsourcing Your Payroll Function
Among the many tasks that payroll professionals cite as frustrating, staying up to speed on ever-changing government tax regulations and the cost of correcting mistakes or paying penalties for errors are at the top of the list. Add to that the relentless and cyclical nature of payroll–it has to go out accurately and on time, every time–making it hard to find a convenient time for payroll staff to even take a vacation. Given the sheer amount of time and manual work payroll responsibilities can require, it is easy to understand why many companies opt to outsource more than just the technology. They outsource payroll processing and compliance as well (also known as ‘managed payroll’).
Once payroll is outsourced to a reputable managed payroll partner, time is immediately freed up and can be applied to issues that affect productivity and the bottom line. Employers suddenly find themselves only needing to think about payroll when they approve time once each pay period.
Cost is a significant factor as well: hiring and training payroll employees, keeping them educated on changes in regulations and managing to hang onto them so you don’t have to start over again when they leave, can be costly. Fines and penalties for errors, omissions or late payroll tax filings can get expensive and lead to audits, which can be painful and time-consuming.
Reputable managed payroll professionals stay current with rules and regulations as well as changes in tax rates and state-specific laws. Because payroll is their sole function and they are surrounded by a team of experienced payroll professionals, they are more likely to be informed and employ best practices, such as detailed checklists and audits to reduce or eliminate errors altogether.
Payroll data is sensitive. It can be damaging if an in-house payroll employee shares information about discrepancies in salaries. Identity theft, embezzlement of funds or tampering with company files for personal gain are risks inherent to sensitive data. A Wise payroll professional recently related a story about her team being contracted by a client to perform a payroll process review for an organization because the company suspected embezzlement and wanted to track down the problem without tipping off the guilty employee. The culpable employee was identified and the issue was addressed without drama because of the evidence uncovered by the process review. Having an outside company handling the reconciliations for your payroll can decrease the possibility of fraud or theft within your company.
Are you one-hundred percent confident that the sensitive personal data your employees have entrusted you with is safe? Is it held in a secure, encrypted system? Not having the right security features in place to keep data safe from today’s digitized security threats can expose your company and employees to unreasonable risk. A quality payroll provider invests in reliable systems for storing and protecting data. A blog post from Technavio highlights why outsourcing keeps data more secure: “Keeping data secure has never been more important for any business around the world. Any companies outsourcing their payroll to a dedicated provider would demand all employees’ personal information is held in a secure, encrypted system. Therefore, payroll outsourcing service providers are required to have better insights into data security that impact not only payroll systems, but also systems that service HR, finance, tax, and other key functions.”
Maintaining detailed records and reports; keeping track of benefit deductions, garnishments, new hires and terminations; verifying social security numbers; documenting paid time off; preparing W2s; staying up to date with the latest version of payroll software; changing tax tables; filing monthly, quarterly and annual payroll and tax reports; and staying abreast of federal and state regulations can feel overwhelming. It is easy to understand why payroll staff can experience anxiety around the many details that must be maintained flawlessly to avoid errors, penalties, audits and other compliance issues. On top of cost and time savings, outsourcing your payroll function to experts who stay on top of and updated on all the details can bring relief and a greater sense of well-being.
Improving your Technology ROI
A strong managed payroll partner will have in-depth knowledge of your HCM/Payroll technology, and leverage its capabilities to streamline processes and deliver meaningful information. By maximizing capabilities such as workflow and employee/manager self-service, overall system satisfaction (and the resulting return on investment) is enhanced.
As technology enables better inter-continental communication and business transactions, more companies of all sizes are shifting or expanding work overseas and gaining responsibility for compensating employees in multiple countries. Imagine even more regulations and tax laws creating more opportunities to make errors, as well as employees clocking in from multiple time zones. They will be expecting culturally differing compensation and vacation packages and direct deposits to foreign banks. Multi-country payroll outsourcing (MCPO) allows professionals who already know how to do the job successfully keep operations smooth and payroll ticking along reliably for all employees no matter where they call home.
Mergers & Acquisitions
Much like trying to combine oil and vinegar, attempting to merge two or more organizations that use different software, schedules and pay policies can feel impossible—especially if you have staff who do haven’t faced the situation previously. Outsourcing the task to professionals who have done it many times before can avoid major compliance issues, late payments to irate employees, errors that rack up fines and uncomfortable attention from executives who already have enough on their plates.
Peace of Mind
What we hear most from our managed payroll clients is that knowing our experienced, knowledgeable professionals are handling their payroll processes in a compliant, accurate, timely, reliable manner brings them peace of mind. Add to that the tangible benefits of time, better confidentiality, more secure data protection and bottom-line savings and it is clear why more and more organizations are looking at 3rd party payroll systems vs. simply the payroll system.
If you would like to explore the idea of outsourcing your payroll function, contact our payroll experts at Wise Consulting today!
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