Contents
Introduction 2
Payrolloutsourcing:Thefacts 4
Whyoutsource? 5
Bureauormanagedpayroll? 8
Debunkingthemyths 10
Howtooutsourceyourpayroll 13
Benefitsofpayrolloutsourcing|PAGE 1Whitepaper
Benefitsofpayrolloutsourcing|PAGE 1
Introduction
Hasanyoneinyourcompanyeverbeenpaidtoomuch,toolittle,orevennotatall?
Whenyourpayrollsystemisrunninglikeawell-oiledmachine,itgoesunnoticed.Butwhensomethinggoeswrong,itsuddenlybecomesahugeproblem.
AndmistakesDOhappen.Eventhemostexperienced,meticulouspayrollprofessionalscanmakemistakes–they’reonlyhumanafterall!
Withmountainsofpaperwork,thepressureofprovidinganessentialserviceandthethreatofharshfinesforincorrectsubmissions,in-housepayrollcanbearealpainforyourHRdepartment.
Should you keep your payroll in-house?
Doyouthinkin-housepayrollischeaperthananoutsourcedservice?Areyouprotectiveofemployeepaydetailsandwanttomanagelastminuteamendmentsyourself?
Well,inreality,outsourcedpayrollisnotonlyextremelycosteffective,butyou’llalsogetcountlessadditionalbenefitswhichwillsaveyouahugeamountoftimeandmoney,aswellastakingsomeofthepressureoffyourin-housestaff.
Benefitsofpayrolloutsourcing|PAGE 2
Benefitsofpayrolloutsourcing|PAGE 2
Whitepaper
As one of your most critical processes, it’s essential that your payroll always runs as smoothly, effectively and legally compliant as possible. Ask yourself:
z AreyouconcernedaboutyourcompliancewithRealTimeInformation(RTI)?
z Doesyourbusinessexperienceregularpayrollerrors?
z IsyourHRdepartmentstrugglingtocopeunderthestrainofpayroll?
z Areyoulookingtocutcostswithinyourpayrolldepartment?
z HaveyoubeenfinedbyHMRCforincorrectsubmissions?
z Areyouspendingtoolongonpayrollprocessingeveryweek/month?
z Doyouhaveproblemswithyourin-housepayrollsoftware?
Ifyouansweredyestoanyofthesequestions,readontofindouthowyourbusinesscanbenefitfromoutsourcedpayrollservicesandhowtoimplementit.
Benefitsofpayrolloutsourcing|PAGE 3
Benefitsofpayrolloutsourcing|PAGE 3
Whitepaper
Payroll outsourcing:The facts
z 95%ofUKbusinessesoutsourceatleastoneoftheirbusinessprocesses
z 61%ofbusinessesareopentotheideaofoutsourcingpayroll,giventherightpriceandservicelevels
z 63%ofbusinessesalreadyoutsourcetheirpayrolloperations
z Themainreasonforoutsourcingisthatasignificantpartofthecostofmanagingpayrollcanbespreadacrossmultiplecompanies
z 42.4%ofbusinessesbelievethemostimportantbenefitofoutsourcingpayrollisincreasedcosteffectiveness
z HMRCsaysthatover2millionbusinessesdonotkeepsufficientrecords
z Businesseswhichdonotmeettherequiredbook-keepingstandardscouldbefinedupto£3000
z HMRChasincreaseditsincomefromcomplianceinvestigationsby39%
Benefitsofpayrolloutsourcing|PAGE 4
Benefitsofpayrolloutsourcing|PAGE 4
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*Statistics sourced from a 2010 Accountancy Age Survey on Payroll Outsourcing and from HMRC.
Benefitsofpayrolloutsourcing|PAGE 5
Benefitsofpayrolloutsourcing|PAGE 5
Whitepaper
Didyouknowthatoutsourcingyourpayrollisoneofthebestwaystoimprovetheefficiencyofyourbusiness?Therearedozensofwaysthatpayrolloutsourcingcandramaticallybenefityouandyouremployees.Herearejustafew…
Cost effective
Considerthecostsofemployeesalariesandbenefits,NationalInsurancecontributions,thepriceofyourpayrollsoftwareandthemaintenancefees.
Ontopofthat,youhavetimecostsfortrainingandprocessing-nottomentionthepriceofpaper,inkandstationery!You’llfindoutsourcingeverythingforamonthlyoryearlyfeeismuchcheaper.Ifyou’rehiringinternally,yourpayrollcouldcostyou£15,000forsomeone’ssalary.Outsourcingcancostaslittleas£800.
Efficient
Payrollprocessingisnotonlytime-consumingbutitalsostopsemployeesfromtendingtoimportanttasks.Byoutsourcingthisprocess,youremployeescanfocusonaddingvalueelsewhere,leavingyourprovidertousethevasttechnicalresourcesattheirdisposaltoefficientlyprocessyourpayroll.
Compliant
UndernewlegislationcalledRealTimeInformation(RTI),you’llgetfinedifyoufailsubmitinformationtoHMRCeachtimeanemployeeispaid.Thiscanbefinanciallydamagingtobusinesseswhostruggletokeepontopofdataorworkwithanunreliablesystem.Withoutsourcedpayroll,it’salltakencareofbyyourprovider,whowillfullyprepareyouforanyupcomingchanges.
Why outsource?
Secure
Areyoureluctanttoswitchtoanoutsourcedpayrollservicebecauseofsecurityconcerns?Noneedtoworry!Yoursensitiveinformationisheldinasecure,backed-upandpasswordprotectedenvironment,oftenwithtechnologywhichhelpsyouidentifypayrollfraud.
Accountable
Whenitcomestoaccuracy,yourpayrollproviderisfarlesslikelytomakeamistake.But,inthisunlikelyevent,theproviderholdscompleteaccountability.Ifthere’sadelay,orpaperworkishandledincorrectly,it’suptoyourprovidertocleanupthemess.
Iftheycan’torwon’t,youcansimplytakelegalactionandquicklychangeprovider.Ifanemployeemakesthesameerror,you’llfinditdifficulttofirethem,thenreplaceandtrainanewrecruitinthetimeitwouldtaketomoveonfromapayrollprovider.
Benefitsofpayrolloutsourcing|PAGE 6
Benefitsofpayrolloutsourcing|PAGE 6
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Bureau or managed?
Everyorganisationhasitsownspecificpayrollneeds.Andthat’sexactlywhypayrollprovidersoffersomanyflexiblechoicestoensureyougetexactlywhatyouneed,fortherightprice.
Youcanchoosefromeithera‘Bureau’or‘Managed’payrollservice,whichofferdifferentlevelsofservicedependenton…
z Howmuchinvolvementyouwant
z Howmanyemployeesyouhave
z Howmuchin-houseexpertiseyouhave
z Howmuchexpertiseyouwanttokeepin-house
z Howmuchvisibilityyouwanttomaintain
z Howmuchyouwanttospend
‘Bureau’requiresajointeffortfromthepayrollproviderandthebusinessitself.‘Managed’offersafullservice,takingtheburdenofpayrollcompletelyoffyourhands.
Bureau
All the benefits of an in-house payroll system, without the hassle
WithacosteffectiveBureauService,youcantakecontrolofyourpayrollandemployeeinformation.Simplysendthedatatoyourpayrollprovider,they’llprocessthepayrollandprovideemployeepayslipsandreportssoyoucanmakepaymentstoemployees,HMRC,pensioncompaniesandallotherrelevantthirdparties.
Benefitsofpayrolloutsourcing|PAGE 8
Benefitsofpayrolloutsourcing|PAGE 7
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You’llbeprovidedwithafully-developedsystem,savingyoutimeandmoney,andgiveyouthepeaceofmindthatyourpayrollisbeingwelllookedafter.Youcanevenbenefitfromaself-servicecloud-basedsystemwhereyouremployeescanviewtheirownpayslipsonline.
Ifyoupreferalevelofcontroloveryourpayrollfunctions,Bureauwillbeperfectforyou.Whileyourin-houseteamtakescareofdata-entryandreporting,theprocessingandpayslipproductionishandledexternally.
Ensureyouhaveaclearideaoftheamountofthesupportyou’llreceivefromyourprovidersoyouknowtheexactskillsandlevelofinvolvementyou’llneedin-house.
Managed
Remove the headache of running your own payroll, so you can get on with running your business
Ifyoudon’twanttoworryaboutyourpayrolleveragain,youcangetthefullpackagewithManagedPayroll.Yourpayrollwillbecompletelylookedafterforyou,includingdatacapture,processing,printing,distributionandreporting…everything!Allyouhavetodoiscollectpayrolldataandpassthisontoyourprovider.
Yourpayrollproviderwillensureyouremployeesarepaidaccuratelyandon-time-whetherthat’sweekly,fortnightlyormonthly.They’lleventakecareofBACSpaymentsforyou-straightintobankaccountsorascheques-andgenerateofyear-endstatementsandforms.
WiththeintroductionofRTI,compliancewithHMRClegislationhasneverbeenmoreimportant.But,withexpertpayrollprofessionalsmanagingyourpayrollforyou,RTIworriesareathingofthepast.Afullymanagedsolutionistypicallymoreexpensivethanapartialservice,thoughmanyfindthatthiscostisoffsetbysavingsinsoftwareandpersonnel.
Benefitsofpayrolloutsourcing|PAGE 9
Benefitsofpayrolloutsourcing|PAGE 9
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Benefitsofpayrolloutsourcing|PAGE 10
Benefitsofpayrolloutsourcing|PAGE 10
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Debunking the myths
Somebusinessownersarereluctanttooutsourcetheirpayroll–but,inreality,mostofthereasonspeopledon’twantoutsourcearejustmyths.We’reheretoshowyouthatthesemythsaboutoutsourcingyourpayrollhavenobasisinfact…
I’ll have less control
Justbecauseit’shandledoff-sitedoesn’tmeanyou’llhaveanylesscontrolthanyouneed.
Youcanstillhandletheprocesses,suchaswhogetspaidandhowmuchtheyget,soyou’llstillmaintainsomecontrol.
It’s less flexible
Lastminuteorunscheduledchangestoemployee’spaycanbehandledjustasflexiblywithapayrollprovider.
However,thismayrequireusingagoodproviderwithastrongcustomerserviceteam.Bybuildingasolidrelationshipwithyouraccountmanager,therewillreallybenodifferencetohavingsomeonesatinyourofficeandanychangescanbemadewithease.
It’s impersonal
Manypayrollprovidersarenotimpersonalatall–ifyouselecttherightone.
AtMoorepay,forexample,weseenewclientrelationshipsasabsolutelycrucial.Acontactwillgettoknowanorganisationpersonallyandgainanunderstandingofanyparticularrequirementsitmayhave.
We’lldevelopaworkingknowledgeofyourpayrollanddoublecheckalldataforaccuracy.
Benefitsofpayrolloutsourcing|PAGE 11
Benefitsofpayrolloutsourcing|PAGE 11
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It’s unreliable
Anestablishedprovidershouldprovidereliable,accuratedataprocessingmonthonmonth,yearonyear.Processingthousandsofpayslipsamonthforlocalandnationalcompaniesisproofofareliableservice.
Forexample,atMoorepay,weensureapayslipaccuracyofover99.65%-Canyourownin-housepayrolldepartmentboastthesamestatistics?
It’s less secure
Thereisacommonmisconceptionthatpayrolldatastoredoutsidetheorganisationwillbevulnerabletoaccessorevengetlost.But,inreality,yourdatawillbemoresecure,sinceanoutsourcedpayrollproviderinvestsheavilyintechnologysoit’smuchmorerobust.
Moorepay,forexample,usessecurecloud-basedsoftwarewithafullbackupandrecoveryofthesystemswithin8hoursofanydisasters.
Incontrast,themajorityofsmallerbusinesseswillhavelittleornobackupordisasterrecoveryiftheirpayrollsystembreaksdown.Somebusinessesarealsoworriedaboutthesensitivityoffinancialinformation.But,sincetheintroductionoftheDataProtectionAct,outsourcedpayrolldatais,infact,protectedandkept‘safe’bylaw.
It’s more expensive
ItiscertainlyNOTmoreexpensivetohireoutyourpayrollprocessing.Whenyouconsiderthecostofanemployee’swagesandaddinbenefits–payrollcostsquicklyaddup.Ifyouaretheownerofaverysmallcompanyandyouaretryingtodopayrollyourself,thecostofyourtimeisevengreater.
I’m happy with how things are
Youmightwellbehappywithyourpayrollset-up,butwhathappensifthepayrollsoftwaresystembreaksdownorsomeoneisill?Bynothavingtothinkaboutthemonthlygrindofpayroll,youandyourteamcanfocusonotheraspectsofyourbusinesswhicharemoreimportantandmoreproductive.
YoucanavoiddealingwithHMRCandforgetaboutchangesinpayrolllegislation-becauseit’sallhandledbyyourprovider–andit’salsofantasticifyouarethinkingaboutstreamliningyourbusiness.
Benefitsofpayrolloutsourcing|PAGE 12
Benefitsofpayrolloutsourcing|PAGE 12
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Changing methods is a hassle
Eventhougheveryorganisationhasitsownspecificprocessesandprocedures,agoodoutsourcedpayrollproviderwillabsorbanypainofchangeover.
AtMoorepay,weworkcloselywithclientsateverystagetomaketheprocessaseasyaspossible.Ourimplementationconsultantsareresponsibleformakingitallhappen.
Youmightexpectimplementationtobeatime-consumingprocess,butitcantakeanythingfromafewhoursto10days.
We still need payroll expertise in-house
Someorganisationsthinkthathavingapayrollexpertonsiteisrequiredtomanagebothdataandtherelationshipwiththepayrollprovider–butthisisn’ttrue.
Allthatyou’llneedisapointofcontactwithagoodunderstandingofyourbusiness.Theydon’tneedtoknowanythingaboutpayroll,justwheretogetthenecessarydatafrom.
So,withthemythsofoutsourcedpayrollexposedandthedustsettled–whynotstopmaking‘excuses’andfindoutwhattodo,whichweaddressinournextsection.
Benefitsofpayrolloutsourcing|PAGE 13
Benefitsofpayrolloutsourcing|PAGE 13
Whitepaper
How to outsource
Ifyou’recomingaroundtotheideathatoutsourcingyourpayrollmaybethebestoptionforyourbusiness,wehaveputtogetherthesesimplestepstohelpyou.
1 Assess your current payroll
Thefirststepistoassessthecurrentprocesses,practices,employeesandexistingcostsinyourorganisationinordertogiveyouaclearpictureofyourstrengthsandweaknesses.
Asaresult,youroveralldecisionmakingwillbewell-informedandprecise.
2 Define your requirements
Oncompletingyourinitialassessment,thenextstepistohaveaclearideawhat,andhowmuch,ofyourprocessesistobeoutsourced.Doyouwantamanagedorbureausolution?
3 Analyse the provider market
Onceyouknowwhatyouwant,it’stimetodoyourresearch.Notallpayrollprovidersofferthesameservice,soit’simportanttoknowtheprocesses,activitiesorevencountriesyouareoutsourcingto.
4 Prepare the proposal
Youneedtodocumentyourexpectationstoensureyourpayrollprovideractsinanefficientandeffectiveway.Facetofacediscussionscanalsohelpinreducingandsaveexcesspaperwork,timeandeffortonbothsides.
Benefitsofpayrolloutsourcing|PAGE 14
Benefitsofpayrolloutsourcing|PAGE 14
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5 Select a great payroll provider
Whenselectingyouroutsourcedpayrollprovideryoushoulddoabackgroundcheckonthembeforemakinganydecisions.AtMoorepay,forexample,weprideourselveson:
z Avarietyofintegratedsolutionstosupportyourpayroll,HRandcomplianceneeds-nomatterhowdiversetheymaybe.
z Beingprompttorespondtoyourneeds,beitfromtheinitialsalesenquiry,throughtoimplementation,deliveryandon-goingsupport.
z Constantlyevolvingandupdatingoursystemsandprocessestoprovideyouwiththelatesttechnologyavailableinthemarketplace.
z Accuracy,deliveryandqualityoftheservicesandsolutionsweprovide.
z Adedicatedteamofsolutionexpertssoyoucanrestassuredyourbusinessandemployeesareinsafehands.
Beforeyoumakeadecisiononyourprovider,it’sessentialtoensureyourpayrollproviderfulfilsthesecriteria.
6 Prepare a watertight service level agreement
Whenyouarepreparingyourcontract,or‘servicelevelagreement’,youshouldoutline…
z Responsibilitiesofyourproviderandstaffmembers
z Aclearprocessforresolvingpotentialdisagreements
z Clearlydefinedresponsibilityandaccountabilityinthecaseofpayrollerrors
z Adefinedprocessforidentifyingerrors
z Clearlydefineddeadlines
z Schedulednegotiations
Benefitsofpayrolloutsourcing|PAGE 15
Benefitsofpayrolloutsourcing|PAGE 15
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7 Implement your strategy in the most efficient way
Inordertosuccessfullyimplementyournewoutsourcedpayroll,youneedtoensureyouunderstandyourcompany’snewresponsibilitiesandthatyourteamisefficientlyresourcedandskilledtodealwiththem.
Dependingonthetypeofoutsourcingserviceyouhaveselected,you’lleitherhavetoeitherinputthedataintoyournewsystemorsendittoyourprovider.Theremayalsobesomeextratrainingoremployeecommunicationrequired.
Afterthat,it’sasimplecaseofensuringyouandyourprovidersticktothedeadlinesyouputinplace.Then,sitbackandrelax–butknowthat,shouldanyproblemsarise,yourproviderisavailabletohelpyou.
Areyoureadytoimproveyourbusinesswithanoutsourcedpayrollsolution?Wecanhelp!Findoutmoreathttp://www.moorepay.co.ukorcall08451844615.
Understand how your payroll is currently being processed and why this method was chosen
Sit back and relax! But know that should any problem arise, your provider is available to help rectify the issue
Either input data into your system or send data to your provider (depending on your solution)
Implement and test the new system
Understanding how your provider’s performance will be measured and which deliverables should be met
Define the requirements to your provider, i.e. the specific requirements of your payroll
Choose a provider. Check:
They have a good track record with companies like yours
They utilise the relevant technology
They can keep you compliant
They are able to provide support and training where necessary
Define your goals for outsourcing. Is it to cut cost? Improve processes?
Choose between a bureau or managed solution and understand the level of information you will be required to pass to your chosen provider