Accuchex Blog

Being Clear On Payroll Outsourcing Costs

Posted by Leslie Ruhland on Apr 18, 2019 7:31:11 AM
Accuchex Payroll Solutions
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Outsourcing business functions is a matter of fiscal strategy. And viewing outsourcing costs as an investment rather than an expense should be part of that strategy.



As organizations grow in size, so does the associated support functions within that organization. More employees means more HR and payroll tasks. More employees require more internal support, which means more employees just for those functions. And this can become counterproductive at some point. 

Every business must consider the costs involved with any decision, or change in direction or strategy. This is common for many issues such as hiring, expansion, capital purchases and a number of other business decisions.

And outsourcing your business functions should be approached in a similar fashion. 

The problem for too many businesses, especially those that have yet to outsource any of their internal functions, is that outsourcing is often treated solely as an "expense." And it is certainly true that services such as managed payroll do incur a "cost", however, it is far more strategic to view these costs as an investment, not an expense.


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There Is an ROI from Outsourcing

The truth is that, while it will incur a cost to move your payroll processing to a service provider, outsourcing can actually be a very cost-effective option in that it can free up valuable time and resources within your organization. And the costs are typically far outweighed by the gains in productivity, accuracy and security.

As an organization grows, the demand for accuracy and compliance on the part of that company's payroll staff increases. So does the likelihood of errors and oversights. And these can be costly.


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In addition to the potential savings from re-working employee's payroll or from various fines, fees and other related expenses from errors and oversights, there is the added savings that come from requiring less payroll staff.

Being to re-allocate available in-house resources to more productive tasks and streamlining a portion of your overall staffing requirements will result in less overall expense, which will go directly to the bottom line, of course.




Outsourcing Payroll Management as a Business Strategy

There are several strategic reasons for outsourcing your payroll to a professional payroll management services company. Although you may decide to keep some of your general accounting operations in house, accounts payable and receivables, for example, outsourcing the payroll process is a smart decision for many businesses.

Remember that paying someone else to manage your payroll is not much different fiscally than paying someone in-house to do the same. However, it be less cost-effective to keep all of your payroll functions in-house and many businesses experience the cost-savings from outsourcing to be significant. 

As your business grows and expands, your payroll staff will become increasingly overwhelmed with more responsibilities, monitoring and complying with new regulatory obligations, and constantly keeping abreast of the requirements of a continually changing payroll environment. At some point, the sheer weight and breadth of interactions between departments combined with the regulatory demands of federal, state and local agencies can overwhelm your business.

From a strategic standpoint then, by outsourcing some or all of these payroll and HR functions, you will  delegate these processes to a reliable vendor. This decision can be both cost-effective and a strategic investment on a number of levels.

Being Clear on Payroll Processing Costs

The growing trend among businesses, including both small and larger organizations, has been towards more outsourcing of critical business processes. This has been especially true for many HR and payroll process functions. 

This infographic illustrates some of the costs and trends among businesses when it comes to payroll practices:




Investing In Outsourcing as a Business Strategy

A common response to increasing business growth and a growing staff is to require overtimes hours from the payroll staff every pay period , or hire additional low-level HR office staff to help with the workload. In addition, many companies opt to spend typically huge sums of money on new payroll software to help automate and streamline the process.

While these are certainly acceptable tactics for dealing with a growing payroll management process, eventually a growing business is going to reach a point of diminishing returns.

When a company's HR and payroll staff is overworked and overwhelmed, payroll and compliance mistakes begin to occur more frequently. And payroll errors and omissions can be expensive and put a company at risk. The IRS, the state labor boards, and labor agencies can become involved and the results can include fines or additional taxes and fees, all of which can become costly.

In addition, there is a diminishing of employee trust and confidence, which can then impact employee morale and can damage the integrity of a company's management and leadership.

While, not every business can or should outsource all of their HR functions, even smaller companies can still benefit from the cost-savings of outsourcing one or two major functions. And the most commonly outsourced business function is payroll.

Payroll Outsourcing and HR Management Strategy

Because outsourcing HR functions is an increasingly common strategy for many businesses, the benefits and advantages are worth asking about.

In addition to reducing your in-house costs, increasing accuracy and security, you can also benefit by freeing your HR resources for improving operational functions, recruiting efforts, policy manuals and training. 

For example, with payroll management, you have a number of options for your HR and payroll staff. Software that can be installed in-house, or cloud-based programs offer a good alternative. But if you really want to take full advantage of the benefits available to you, outsourcing to a provider like Accuchex can still be the best decision.

Reliability, full-service options, and reputation are the hallmarks of a quality HR management service provider. If you are currently looking to invest in outsourcing we can help you make an informed decision. Just call Accuchex Payroll Management Services at 877-422-2824.


Free Download: Payroll Outsourcing Guide

Topics: managed payroll services, outsourcing payroll management, payroll compliance, managed payroll, payroll outsourcing

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