The financial expert Rhonda Abrams advises businesses that “If you have one employee, get a payroll service”. Like any other outsourcing service, it comes with pros and cons. Hence, it is advisable to consider its benefits and disadvantages before transferring the responsibility to a third party.
The outsourcing of payroll has many advantages and handing over this important business function can save money, time, and compliance headaches for businesses of all sizes. This is the reason why an increasing number of businesses including startups to large enterprises are turning towards professional payroll services for end-to-end management of all the activities. Payroll offers numerous benefits to the corporate. Let’s have a look at the benefits of transferring payroll function to the third party below:
Avoid penalties
The Payroll function comprises keeping up with various legal compliances. It is observes that around 40% of businesses pay late fees and penalties due to late and incorrect filings. However, this situation can be avoide if the payroll services are transferres to an outsourcing company as it is their responsibility to keep a tab on the latest and upcoming legal laws and compliances. They provide tax guarantees so that companies don’t face any penalty and their reputation doesn’t get maligned.
Cost-efficient
Outsourcing of payroll services helps organizations in managing their costs. Streamlining and automated management of payroll functions can help in reducing the cost sometimes even by 500%.
Better time management
Payroll outsourcing is a tedious and brain-storming process. It can provide ample productive hours to employees for pursuing other important business activities and focus on the core operations of a business.
Quick access to expert services
Outsource payroll experts offer quick customer services for resolving any unwanted issue and also keep a check on changing rules and regulations for updating the latest payroll software on a timely basis.
Automatic update
Adding new employees and their data as well as deleting employees who are no longer associates with the organization has now become easy and stress-free with the payroll management system.
Curtail risk potential
Attempting to manage payroll system yourself is a risky process as it involves the management of multiple activities such as reports submission, tax calculations, regular updates, timely payments, updating records, etc. One small mistake leads to utter chaos, employee disagreement, and penalties. Also, it creates stress at work and diverts the attention from core operations hence increasing the chances of mistakes occurring regularly. However, outsourcing payroll services can help you free from such woes.
Stress-free management
Managing payroll manually is a tedious and stressful task and also turns into a nightmare in worst cases whereas the third-party payroll services are automated and runs on advanced software reducing the chances of human error to minimal.
Better data security
In-house payroll management comes with a high risk of data theft and embezzlement. Even if the software are secured however an internal team of technical experts is required to protect and store data on high-security cloud-based servers and use avant-garde technologies for protecting the critical information. Besides, the third-party payroll service providers also use electronic payment methods so that even in worst-case scenarios data can be easily traced and the potential losses can be recovered without much hassle. Deployment of expensive software, its updates, and also having an expert team on board for its management is certainly an expensive affair for any organization.
Access to latest technologies
The new age advanced global payroll service providers use cloud-based systems for managing sensitive data ensuring better integrity, visibility, and audit-tracking of payroll processes. The centralized management of payroll information also enhances the quick and comfortable outreach and access for customers instead of in-house requests which usually take days to process. Outsourcing also offers benefits of the Robotic Process Automation (RPA) provided by many payroll service providers for optimization of processes which is focused on improving both accuracy and timeliness of the international payroll system.
Offer Cross-functional Collaboration
A good payroll company will also offer cross-functional collaborations with systems that acts as key for the success of an organization. Integration of various separate functions such as Human Resources, Accounts, Finance etc. with the payroll system provides multiple benefits such as time savings, reduced IT & administrative costs, and enhanced efficiency. The integration of Human resources and Payroll system aids seamless data sharing eliminates need for in-house teams for manual data transfer of before and after processing to ensure process moves in a quick and secured manner. These updates include terminations, promotions, new joining, deductions, tax etc. which are automatically available on the portal and saves time and chances of human error.
Moreover, the organizations are also protected as the information required for running payroll, tax filing, and calculation of benefits doesn’t has any discrepancy. The advanced technology used by third-party payroll solutions provider also delivers important insights through advanced analytics for both payroll and human resource management. It identifies how and where errors can occur, their cost impact and suggests solutions for preventing them. It is also important to understand the disadvantages of outsourcing payroll system which may include the following-
• Data security and theft
There is a possibility of data theft and security related issues of the confidential employee data hence it is important to do complete research about the payroll service provider and the services offered by them.
• Continuous guidance & co-ordination
Transferring the entire payroll management system doesn’t merely end the job. The internal team needs to be in continuous co-ordination to ensure the activities are processed without any error and interruption.
• Follow Deadlines:
Ensure to follow the deadlines realistically as providing information an hour ago takes time for processing and hence last0minute wrap up can prove to be detrimental. This can cause unnecessary stress and there is a high possibility of missing out on important information and delays.
Infotax, a leading online finance and tax consultancy company provides top-notch Payroll Outsourcing Services for both SMEs and large conglomerates to manage their payroll accounts globally. Their team of experts comprises industry veterans with hands-on experience in payroll services and legal compliances seamlessly under expert guidance.
