Why outsource?

 

Running a business has ‘must dos’ such as paying staff efficiently and staying within the law.

advo’s support for SMEs includes the ‘must dos’ incorporating both a payroll bureau and HR consultancy.  A business leader must have a broad skill-set, either themselves, through employees or business partners.  Using a strategic business partner to work alongside a business can improve control while saving money.

In the first of a two part article we look at how SMEs can benefit through using expert support.

Payroll is seen as one of the biggest headaches that SME businesses have to deal with. The need for accuracy and ever-changing complexity is something that has to be faced, and when wrong the implications can be costly.   Choices seem to be doing it yourself, which is now easier with the introduction of more software support packages, or using accountants or payroll bureaus. We take a look at the reasoning behind why many SMEs outsource their payroll.

Expertise / Knowledge

Companies that manage their own staff payrolls need to retain knowledge within the business in conjunction with using accountancy/payroll software. As this work often does not need a full-time employee the task is often spread across other tasks or a part-time employee is recruited. Difficulties here are holidays and sickness. The staff member may be absent from work but employees still have to be paid.  But Payroll is more than just paying employees on time.  Not only do staff need to be paid but also HMRC and auto-enrolled pensions. There are different types of employment with complex payroll situations and rules that change from year to year that “in-house” payroll staff may not be familiar with, or up to date which may result in serious fines and fees from HMRC. Whereas a payroll bureau’s knowledge and expertise is current and wide-ranging.

Costs

The cost of running an in-housel payroll department can quickly accumulate when it involves a payroll software, equipment, training, printing payslips, and distribution of wages, not to mention the potential fees and fines if procedures are not completed accurately and on time. Consideration of keeping knowledge current is also a cost concern. Outsourcing payroll companies often offer a cost per an employee, often at a fraction of the cost of an in-house operation, and take ownership of ensuring reporting to HMRC is accurate and on time.

Staff and training

Payroll is a ‘must do’ business process that requires dedicated and knowledgeable staff to complete, for example the rules around statutory maternity payments are hard for the layman to understand. However many small businesses often use unqualified employees to run their payroll as an additional function alongside other responsibilities while they still have to keep knowledge current.  When businesses outsource payroll, it removes a distraction allowing a business to focus on its key tasks, growth and profitability.

Hiring payroll staff will likely not be a cost-effective solution to many SMEs, when the business is not large enough to make it worth having a full/time payroll employee. As a result, companies may have to train employees in payroll as an additional task to their usual work roles who will also have to keep themselves updated with new processes and sudden legislation and payroll law changes. Someone will have to ensure staff knowledge is up to date, another oversight function of their manager, who will also likely not have the skills or knowledge.

Avoiding errors

Incorrect management of a business’ payroll can result in large fines and staff dissatisfaction. Overpay a staff member for one month and there are few repercussions, but underpaying can result in serious problems. If an error continues for month after month then the problem is either asking the employee for money back, causing potential hardship, or alternatively the company’s cash flow in paying a large extra amount.

Resources

Handling payroll is a lengthy and stressful process that can take a lot of time to complete even if with the knowledge. An outsourced payroll service has skilled payroll specialists and tried and tested procedures ensuring all is completed in a timely manner.

Reliability

Having a payroll /BACS bureau as a business partner means that there’s always a dedicated team of specialists that will ensure staff are always paid on time. Whereas with an in-house payroll employee there will be times that problems occur with sickness or holidays. Finding a skilled replacement at this time can then be hard.

Informing staff

Staff expectations are changing as to how they receive information from their employers. Employees increasingly expect work information to be as readily available as they experience in their home life with smart phone access.  Many Payroll Bureaus now have the ability to securely email payslips and other documents with some now offering the ability to view payslips online.

Security

If business owners have the time to verify every single stage of payroll, making sure that no fraudulent activity takes place, then they should encounter few problems. In reality most business owners are focused on growing the business and often don’t have time to supervise this to the level required also lacking the correct skills to identify when malpractice occurs. New GDPR data protection rules and potential fines are an added consideration.

A payroll bureau will have secure payroll software technology with protocols to detect and block any fraudulent activity in case the company gets attacked by hackers as they will be experienced in managing sensitive data.

Andrew Henderson, advo Payroll Manager

Andy Henderson, advo payroll’s manager comments “Outsourcing payroll will likely be of great help for businesses within any industry allowing them to focus on their core activities. We can ensure accuracy and essential support to ensure all goes smoothly. We do everything from paying staff direct into their bank accounts, reporting essential information to clients and the HMRC while giving employees online access to payslips.”

If you would like information on how advo payroll can support your business please email Andrew Henderson on ahenderson@advogroup.co.uk or visit us here.

 
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