The Hidden Time Thief in Your Back Office Is Payroll - Outsource It

Time is of essence in the daily operations of any business; it is one of the most valued assets but sadly very limited. Business owners often focus their time and attention on public facing tasks such as marketing, customer service sales and product development. However, there is a task in the back office that ends up draining energy, focus and productivity and that is payroll processing.

Although this aspect of running a business is important, payroll is one of the business functions that takes so much time and is also prone to human error. This is especially so in small to medium scale businesses that do not have dedicated accounting or human resources departments. This can oftentimes lead to complexities that default in compliance and other HR and tax issues.

This therefore, is why the issue of outsourcing payroll is one to be considered as not just for convenience’s sake but as a strategic necessity. This article will serve as a guide to all there is to payroll outsourcing and how to make the best of it.

The Burden of Manual Payroll

A cursory look at payroll may make it look like a simple task which just entails calculating staff salaries and paying them when due. However, at the back end, it involves a whole lot of administrative tasks such as tracking work hours, handling tasks, calculating deductions, submitting filings, issuing pay slips, and staying abreast of ever-evolving labor laws.

For business that manage their payroll manually or with obsolete systems, the process can be draining. Every time paychecks need to be sent out, someone in the organization must leave other duties that actually generate revenue to focus on sorting salaries. Sadly, too, sometimes, this staff is not even specially trained in this role so they struggle in carrying it out efficiently.

When you factor in holiday pays, newly recruited staff, sick leaves or days, bonuses and labor and tax law compliances, you find that so much time goes into this task every month.

Based on the result of a survey by the National Small Business Association, almost one in every four small business operator spends over 6 hours every month on preparing salaries and all that comes with it.  This accounts for almost a full workday that’s spent on something that doesn’t translate directly to revenue.

You can find a comparison of the cost of a manual payroll system and an automated one here: https://www.softwaresuggest.com/.

The True Cost of In-House Payroll

Although one may be tempted to just chuck off this activity as an internal fixed cost, however, the actual cost is far more than the pay of the staff or person that handles it. The following should be factored into the cost: -

1. Loss of Time – The time spent in this task is one that should have been spent on things that will generate revenue

2. Correction of Human Error – Human error can occur and they are not only frustrating for affected staff but can be costly to correct and sometimes leads to penalties.

3. Compliance Risks – There are laws that govern payroll taxes, employee classification and benefits and these laws are always changing. Any missed update is a recipe for fines and audits.

4. Technology Costs – These include maintenance of software, cybersecurity protections and updates to safely store staff data.

When you add up all the above and include the opportunity costs involved, you will come to the conclusion that in-house management of payroll is oftentimes a hidden thief of time and productivity instead of a reliable or necessary task/function.

Why Outsourcing Payroll Is a Strategic Move

Outsourcing payroll is a strategic move for small and medium scale businesses as well as large corporations for the following reasons: -

1. Reclaiming Time – Time spent in this task can be redirected to other more productive areas that will generate more revenue.

2. Accuracy and Compliance – When experts handle this aspect of business, you are assured of accuracy and compliance with all the necessary regulations.

3. Scalability – Service providers in this area of business can always grow with you as your business evolves and become more complex.

4. Data Security and Confidentiality – You are assured of up-to-date cybersecurity infrastructure with reputable payroll service providers and this translates to safety of your staff data.

5. Cost Efficiency – You save money in the long run when you outsource to experts.  You can learn more here about the current cost for outsourcing this service. It will provide a clear picture.

How to Choose the Right Payroll Partner

Having seen the importance and the benefits to be derived from outsourcing your payroll, you need to choose the right service provider to enjoy these benefits. The following are tips to help you make an informed decision: -

1. Ensure transparent pricing to avoid hidden charges

2. Make sure the services providers can seamlessly integrate with your existing HR or accounting systems.

3. Look out for transparent compliance guarantees.

4. Ensure there is scalability option

5. Prioritize responsive customer service

6. Read reviews

7. Ask for demos

Conclusion

Strategic business development often includes looking out for tasks that can be outsourced to free up time and human resources for more productive and revenue-generating tasks. We have discussed one of such functions in this article and we believe that the information shared here will help you oust the hidden thief of time in your business.