Accuchex Blog

Payroll Management Is A Strategic Function In Your Business

Posted by Leslie Ruhland on Feb 13, 2017 9:00:00 AM
Accuchex Payroll Solutions
Find me on:

Good business practices involve strategy and planning. These are concepts usually associated with controlling overhead and business plans. But it should also include your payroll management decisions.


If you are like most small business owners, when you first started your company, taking care of your own payroll management was a fairly simple task.  More than likely you kept a ledger, maybe some simple software, and just paid yourself and a few employees.

In other words, there was a time when the payroll process didn't take up much of your valuable time and you could focus on growing your business.

Then your business actually grew, you gained more employees, and suddenly payroll management became a burden and a time-consuming one at that.

Trying to Find the Balance for Managing Payroll Effectively

The time you invested in growing your business paid off and now find that, not only have your sales increased, but your staff has also increased to meet the demands of your growing business.  And along with all that growth, your once simple payroll process has ballooned, while the time spent on it has, as well.

Now the question is, "How do you develop an effective strategy for maintaining accuracy, timeliness and compliance without having to spend all of your time on it, or having to add even more payroll staff?"

There are, of course, a few options that can be considered, but continuing to do it yourself is not one of them. Adding more staff can probably resolve the issues, but you already know that employees come at a cost. Investing in more powerful payroll software is a great option, but it can also be costly and require continual support and periodic upgrades.

Realizing the Law of Diminishing Returns

As a business owner with a growing enterprise, you know first-hand that there comes a point where the benefits of managing your own payroll start to diminish. This is known as The Law of Diminshing Returns.

This law states that , "there is a level where profits and benefits gained is less than the amount of money or energy invested."  In other words, there comes a point where you can spread your resources too thin and your business growth starts to plateau.

In addition, the more hours spent on payroll and resolving errors and oversights, the less hours spent doing the things that make the company grow. 

As already noted, you can certainly hire more people to handle your payroll, but with the increase of employee turnover, the investment in training, and the added expenses of hiring an employee that may not be a fit for your company, this may not be the best use of your money and resources. 

Outsourcing Your Payroll Management as a Business Strategy

There are a number of strategic reasons for outsourcing your payroll  to a professional payroll management services company. While you may want to retain some of your general accounting operations such as accounts payable and managing your receivables, payroll is almost always a great function to outsource.

It may seem that it would be more cost-effective to keep all of your payroll functions in-house, the truth is that many companies - both large and small - discover that the cost-savings can be substantial. In addition, there are other benefits that are not easily measured in dollar amounts, but that are just as viable and just as valuable.

With HR managers becoming increasingly overwhelmed with added responsibilities, growing regulatory obligations, and a continually changing payroll landscape, the requirements are staggering. Managing the complex interactions between departments and the growing demands of federal, state and local agencies can sap a payroll or HR department.

Outsourcing can allow you to safely and cost-effectively delegate one of the more burdensome processes to a reliable vendor and strategic move on a number of levels.

Three Benefits of Outsourcing Your Payroll Management

We could add a number of other benefits such as enhanced security and improved compliance. However, above everything else,, these three strategic advantages are always seen as the major benefits:

Cost Savings

While you should always conduct and in-depth cost analysis, most every business can realize significant savings in real dollars by outsourcing this function. In addition to the overhead costs reduction, your company can save on software costs, training and support costs, as well as compliance related expenditures.

Management Savings

This may seem a bit counter-intuitive, but relieving your management team of the tedious work of ongoing payroll functions can improve their overall productivity. Outsourcing payroll releases a substantial number of hours for your HR staff to engage in other tasks with more long term benefits to the company. Removing the burden of payroll processing and reporting functions from often overworked staff can help to ensure greater accuracy, security and compliance.

Time Savings

Because time truly is money, this can be seen as another side of cost savings. According to one survey, the average time spent processing payroll for approximately 50 people was about 18% each month. That's equivalent to having one full-time person process payroll for every 250 employees. This doesn’t include processing changes in payroll, administrating benefits, or other tasks associated with payroll accounting. 

Knowing When to Outsource Your Payroll Management 

Outsourcing any function in your business is a strategic operational decision. And it must be based on more than simply hoping to save money. While saving money is certainly a valid incentive, there are other indicators that can help you know when it's time to outsource your payroll processing:

  • Your staff is struggling to maintain compliance and accuracy
  • Your payroll process exceeds your software's capabilities
  • You are adding employees
  • You are adding payroll staff

There comes a point when it is increasingly apparent that delegating your payroll accounting process to a vendor such as Accuchex is the better move strategically. 

Increase Your Return on Payroll Management

Once you reach a certain number of employees, spending your time on the complexities of payroll management is no longer worthwhile. In fact, you put your company at risk if payroll is late, inaccurate, or you are not up to date on employment law.

Most business owners do not have the time to go to classes and stay abreast of ever changing laws when it comes to employee payroll. As your company grows, you do not give it a second thought when it comes to investing in equipment or technology to better manage the business.

Therefore, it only makes sense to use your time to grow your business while using the expertise of payroll professionals to manage your payroll. 

When considering a payroll management company, make sure you find a company that becomes a partner in your success. For a complimentary consultation to discuss the pros and cons of payroll outsourcing, please contact Accuchex at (415) 883-7733.


Topics: payroll management, HR best practices, payroll process, small business, outsourcing payroll management, strategic planning

Subscribe to the Accuchex Blog